* Euro STOXX 50 Volatility Index surges 5.1 pct
* Worries over Crimea tension weigh on stock markets
* FTSEurofirst 300 closes down 0.7 pct at 1,284.32 points
* Euro STOXX 50 falls 0.5 pct to 3,004.64 points
* FTSEurofirst has worst weekly loss since early Jan.
By Sudip Kar-Gupta
LONDON, March 14 European shares slid lower on
Friday as tensions in Ukraine before a weekend referendum in the
country's Crimea region sent a pan-European equity index down to
its lowest level in more than a month.
The uncertainty over Crimea, after Russia effectively
occupied the region following the ousting in Kiev of former
pro-Moscow Ukrainian President Viktor Yanukovich, also caused a
spike in volatility in equity markets.
The pan-European FTSEurofirst 300 index, which rose
16 percent in 2013, closed down by 0.7 percent at 1,284.32
points - marking its lowest level since early February. The
index also fell 3.2 percent over the week - marking its worst
weekly loss since late January.
The euro zone's blue-chip Euro STOXX 50 index
also fell 0.5 percent to 3,004.64 points while the Euro STOXX 50
Volatility Index - a gauge of investors' fears - surged
5.1 percent to its highest level since early February.
"Europe relies on Ukraine for a lot of its gas, so if there
are problems in Ukraine, it will have an impact on Europe's
fragile economic growth," said Caroline Vincent, European
equities fund manager at Cavendish Asset Management.
GOOD CONDITIONS FOR HEDGE FUNDS
Global equity markets have retreated from multi-year highs
since the Crimea crisis started in late February, which has led
many investors to trim back on equity holdings in order to cash
in on a stock market rise that occurred in early February.
Vincent said she had cut back on Russian stocks, which have
slumped due to the tensions in Crimea, but had otherwise kept
positions unchanged on western European equities.
However, Jeanne Asseraf-Bitton, head of global cross-asset
research at Lyxor Asset Management, said hedge funds with
"short" bets predicting further market declines had performed
well in light of the problems in Ukraine and Russia.
Aurel BGC chartist Gerard Sagnier said European stock
markets could fall by another 5 percent, although he added that
such a retreat could represent a good buying opportunity, given
expectations that European equities should recover later in 2014
as the region's economic pick-up gradually continues.
John Surplice, European equities fund manager at Invesco
Asset Management, also said European stock markets looked
well-placed on a longer-term view over the whole of 2014.
"In terms of risk-adjusted returns, it still looks OK. We're
not facing a break-up of the euro zone and we're no longer in a
recession," said Surplice.