* FTSEurofirst 300 off 1.4 pct
* Russian troops gather near Ukraine border
* DAX hit; German industrial orders slide
* Italy slips back into recession, FTSE MIB sharply lower
* Reinsurers weaken after results
By Tricia Wright
LONDON, Aug 6 A ratcheting up of tensions in
Ukraine and concerns about the strength of Europe's economic
recovery combined to knock European shares back onto a steep
downward path on Wednesday.
The FTSEurofirst 300 was down 1.4 percent at
1,316.28 points by 1100 GMT, its lowest level since mid-April,
on reports of a build-up of Russian troops near the border with
Ukraine, and also on evidence that the crisis there was
affecting Germany, Europe's largest economy.
German industrial orders slid in June at their steepest rate
since September 2011 as geopolitical risks made firms cautious
and euro zone demand fell.
"Those German factory order numbers were just horrible. It
really does just feed into the narrative that Europe is slowing
down," said Michael Hewson, chief market analyst at CMC Markets.
"I think equities are likely to remain on the back foot
until such time as we get some form of clarity on exactly what's
going to happen in Russia/Ukraine ... If you're a German company
you're not going to want to start investing money against a
backdrop of rising geopolitical concerns and a weak economy."
Russia has amassed around 20,000 combat-ready troops on
Ukraine's eastern border and could use the pretext of a
humanitarian or peace-keeping mission to invade, NATO said on
The German DAX, which is dominated by companies
heavily dependent on Russian energy, fell 1.5 percent. The DAX
is now down almost 10 percent since early July.
On Wednesday, volatility, a crude gauge of investor
fear, rose 7.9 percent.
In further evidence that Europe's economic recovery is weak,
Italy's economy unexpectedly slid back into recession in the
second quarter as gross domestic product shrank 0.2 percent from
the first three months of the year.
The FTSE MIB sank 2.5 percent.
Portugal's PSI 20 was one of the biggest regional
laggards, down 3.6 percent, led by banks, with Millennium bcp
, its largest listed lender, down 9.3 percent.
There are concerns that banks will have to foot the bill if
Novo Banco, which was carved out of troubled BES Banco Espirito
Santo, is sold off for less than the state injected via the
country's bank resolution fund.
"When the Novo Banco is sold, the loan has to be repaid to
the state. Who is going to pay if there is a loss? Certainly the
bank resolution fund that is supported by banks. That is what is
weighing on banks' shares today," said Joao de Deus, trader at
Downbeat earnings reports also took their toll on the market
Hannover Re fell 3.5 percent after the German
reinsurer said its net profit rose 10 percent to 211.5 million
euros ($283 million) in the second quarter, slightly less than
expected, as premiums declined.
Fellow reinsurer Swiss Re also declined, by 3.1
percent, after missing profit expectations.
With two-thirds of STOXX Europe 600 companies
having reported results, 44 percent have missed expectations,
compared to just 26 percent of companies on the U.S. S&P 500
that have fallen short of estimates, according to Thomson
Reuters StarMine data.
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 and Daniel Alvarenga;
Editing by Gareth Jones)