* Traders cite concerns over escalating Ukraine tension
* Euro STOXX Volatility Index rises by around 10 pct
* FTSEurofirst 300 down 0.9 pct
* Euro STOXX 50 falls 1.1 pct
* February equity market rally starting to stall
By Sudip Kar-Gupta
LONDON, Feb 27 Escalating political tension in
Ukraine pushed European stock markets lower on Thursday, putting
a brake on this month's rally and causing market volatility to
The pan-European FTSEurofirst 300 index, which
rebounded in February to approach its highest level since May
2008, fell 0.9 percent to 1,336.77 points in early session
trading, adding to a 0.2 percent dip on Wednesday caused by a
fall in luxury goods and financial stocks.
The problems in Ukraine have highlighted a broader slump in
emerging markets economies this year, which impacted equity
markets in January and have hit the earnings of companies - such
as luxury goods groups - exposed to those regions.
The euro zone's blue-chip Euro STOXX 50 index
fell 1.1 percent while Germany's DAX, which hit a
record high of 9,794.05 points in late January, also weakened by
Concerns over the situation in Ukraine caused the Euro STOXX
Volatility index to rise 10.5 percent to 17.80 points -
marking its biggest one-day gain in a month.
On Thursday, armed men seized the regional government
headquarters and parliament on Ukraine's Crimea
The development came a day after Russian President Vladimir
Putin ordered armed forces drills to test combat readiness in
western Russia near the border with Ukraine, prompting a U.S.
warning that a military intervention would be a "grave mistake".
Michel Juvet, chief investment officer at Swiss bank
Bordier, said there could be longer term opportunities for
investors regarding Ukraine.
"If the market has another correction, it would be another
reason to buy equities," he said.
EQUITIES STILL PREFERRED ASSET CLASS
The FTSEurofirst 300 index remains up by nearly 2 percent
since the start of 2014, adding to a 16 percent rise last year,
and equities are still the preferred asset class for many
Record low interest rates set by major world central banks,
designed to boost the global economy after the 2008 financial
crisis, have hit returns on cash and bonds and driven many
investors over to the better gains available from equities.
The European stock market has also been propped up by robust
results from some of the region's leading companies, with
retailer Ahold and British American Tobacco
both rising after posting higher earnings on Thursday.
According to data from Thomson Reuters StarMine, 58 percent
of companies on the pan-European STOXX 600 index have
so far beaten or met market expectations with their
However, Darren Courtney-Cook - head of trading at Central
Markets Investment Management - expected more near-term pressure
on equities if the DAX remained below the 9,700 point level.
"If the DAX holds below 9,700, we could be in for further
downside," he said.