* FTSEurofirst 300 index closes 0.2 percent lower
* Volatility index up 6.1 pct, indicates risk aversion
* Royal Bank of Scotland falls after posting losses
By Atul Prakash
LONDON, Feb 27 European equities pared most of
their early losses late on Thursday, with better-than-expected
U.S. durable goods data and comments from Federal Reserve Chair
Janet Yellen prompting some investors to return to the market.
The FTSEurofirst 300 index, which fell 1.0 percent
earlier in the day on poor company news and Ukraine tensions,
ended 0.2 percent lower at 1,345.46 points. It was helped by
data showing orders for U.S. manufactured goods excluding
transportation unexpectedly rose last month.
Although Yellen's comments before a Senate Banking Committee
did not indicate that the central bank could lower the pace of
its stimulus reduction, investors felt some relief that there
were no negative surprises, analysts said.
"Comments from Yellen indicate that there has been soft data
recently in the U.S. and that has necessarily required
consideration of reduced tapering. That does not mean that we
expect the tapering to be changed, but her tone was distinctly
dovish today," said Lorne Baring, managing director of B Capital
Wealth Management in Geneva.
"Markets are showing some relief that monetary policy may
remain loose and that the Fed is clearly taking a pragmatic view
quarter by quarter."
Yellen said the central bank would be on alert to make sure
recent signs of weakness in the U.S. economy were due to cold
weather and storms, and not signals of a more fundamental
Despite a late recovery in stocks, cyclicals remained under
pressure, with insurance, media and autos
down 0.6 to 0.7 percent on disappointing company news.
Royal Bank of Scotland slumped 8 percent after
posting a loss, insurer Allianz dropped 2.3 percent
following difficulties at its Pimco unit and troubled insurer
RSA fell 4 percent after saying it will tap its
shareholders for $1.29 billion of cash in a rights issue.
Investors' risk aversion was also highlighted by the Euro
STOXX 50 Volatility index, Europe's widely used gauge of
investor sentiment, which gained 6 percent.
"The markets had gone ahead of themselves and we may see
investors taking some risk out of the table," said Thomas
Malloch, investment manager at Redmayne Bentley.
"Any weakness is likely to be well-bought, as a good amount
of capital is waiting on the sidelines to get invested into the
market, but you need to be careful as valuations of many
companies look stretched at the moment."
Political tensions in Ukraine also added to pessimism about
emerging markets which hit equities in January and has dragged
on the earnings of companies - such as luxury goods groups -
exposed to those regions.
On Thursday, armed men seized the regional government
headquarters and parliament in Ukraine's Crimea peninsula, a day
after Russian President Vladimir Putin ordered military drills
in western Russia near the countries' border.
"We're getting to the tail-end of results season, and many
of the results have not been that great. It's also early days in
Ukraine, but the situation over there is making people nervous,"
said Andrea Williams, European equities fund manager at Royal
London Asset Management.
Some individual stocks were hurt by disappointing company
news. Britain's WPP fell 3.7 percent as fierce
competition in the global advertising industry forced the
company to lower its profit guidance for 2014, wiping more than
a billion pounds off its share price.
On the positive side, British outsourcing company Capita
rose 6.8 percent after posting a 14 percent rise in
annual profits and saying was confident about its prospects in