* FTSEurofirst 300 down 0.5 pct, Euro STOXX 50 falls 0.9 pct
* Sentiment subdued on reports of Donetsk assault
* Auto stocks lead declines on emerging market weakness
By Francesco Canepa
LONDON, July 21 European shares fell on Monday
as fighting erupted in eastern Ukraine, the first major eruption
of violence there since a Malaysian airliner was shot down last
Calls are multiplying in the West for new sanctions against
Moscow over last week's downing of the Malaysia Airlines flight
over eastern Ukraine, widely blamed on pro-Russian separatists.
Russia challenged the accusations on Monday.
"The market is really worried about the enormity of the
situation in Ukraine and, without even going into the sanctions,
the rhetoric that escalates," Ashraf Laidi, chief global
strategist at City Index, said.
"The market is going to be jittery ahead of the follow-up
sanctions from the West as well as any reaction from Russia
(and) may use it as an excuse for sell off."
The pan-European FTSEurofirst 300 closed 0.5
percent lower at 1,355.84 points. The euro zone Euro STOXX 50
fell 0.9 percent to 3,137.06 points.
The five-month conflict in Ukraine has added to concerns for
European exporters already struggling with unfavourable currency
Peugeot's shares dropped 3.7 percent after it said
deliveries fell 25.8 percent in Russia, 26.8 percent in Latin
America and 37.2 percent in Africa and the Middle East.
Shares in Fiat and Renault each shed over
1 percent despite encouraging sales figures from Europe's
peripheral markets, leaving the STOXX 600 auto and parts index
down 1.1 percent.
Investors were positioning for some weak emerging-market
figures when auto makers report quarterly numbers over the next
"There are so many weak spots in the global (auto) markets,
and the deterioration in Russia has contributed to the negative
sentiment," Juergen Pieper, an auto analyst at Metzler Equities,
said. "(The auto sector) needs quite a convincing quarter to
change the trend."
While euro zone blue-chip companies get only 0.3 percent of
their revenues from eastern Europe, Russia is a key provider of
energy to many western European countries, notably Germany and
Jeremy Batstone-Carr, analyst at Charles Stanley, said that
concerns over retaliatory moves by Russia, included the
possibility that they might switch off gas taps to Europe, made
European investors especially nervous.
Elsewhere, Israel showing no signs of scaling back its
assault on Gaza, and the potential impact on tourism of
instability in parts of eastern Europe and the Middle East hit
the travel and leisure sector, which fell 1 percent.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Additional reporting by Alistair Smout. Editing by Jane