* FTSEurofirst 300 up 1.1 pct, bounces from Friday's dip
* Rebound led by German blue-chips
By Blaise Robinson
PARIS, Aug 18 European shares rallied on Monday
morning as the threat of wider conflict in Ukraine seemed to
In what may be a breakthrough in Ukraine's campaign against
pro-Moscow separatists, government forces raised their national
flag over a police station in the city of Luhansk that was for
months under rebel control.
Also reassuring investors, Russia's Foreign Ministry said on
Monday a 'certain progress' was achieved during talks among
Russia, Germany, France and Ukraine in Berlin on Sunday.
At 0745 GMT, the FTSEurofirst 300 index of top
European shares was up 1.1 percent at 1,338.02 points. Germany's
DAX was up 1.4 percent.
German blue-chips - considered the most vulnerable to the
tensions between the West and Russia - were among the top
gainers on Monday. BASF rose 2.2 percent and both
Bayer and Siemens gained 1.9 percent.
The pan-European index had lost 0.5 percent and Germany's
DAX had dropped 1.4 percent on Friday, when reports that
Ukrainian forces had destroyed a Russian military column in
Ukraine sparked fears the conflict was escalating.
"Friday's news spooked investors, but it turns out that
there was no escalation involving Russian forces over the
weekend and that rebel forces have actually been retreating,
which helps the market reverse losses," Saxo Bank trader Pierre
"Investors want to believe in this rebound that started
early last week after a 10 percent correction, so we're seeing
buyers of the dip."
Also helping sentiment on Monday, Kurdish fighters pushed to
retake Iraq's largest dam on Sunday and the United States
conducted a second day of air strikes against Islamic State
insurgents who have overrun much of the country's north.
The FTSEurofirst 300 had lost as much as 7.4 percent and
Germany's DAX as much as 11 percent between late June and early
August. The losses came amid fears that the Ukrainian conflict
and tensions between the West and Moscow could derail Europe's
fragile economic recovery and hit corporate results.
Stocks started to recover last week, however, with the
FTSEurofirst gaining 1.4 percent over the week despite Friday's
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Larry King)