* FTSEurofirst 300 rebounds by 1 pct
* Index had fallen 7 pct in last 2 weeks
* Banco Popolare surges after forecast-beating results
By Sudip Kar-Gupta
LONDON, Aug 11 European shares rebounded on
Monday from a two-week drop after investors concluded Russia
would not send troops into Ukraine anytime soon.
Late on Friday, Russia's Defence Ministry said it had ended
military exercises in southern Russia that the United States had
"The Ukraine situation appears to be stabilising. European
shares took a big beating over the last couple of weeks, so
we're seeing a relief rally," said Ion-Marc Valahu, a fund
manager at Geneva-based firm Clairinvest.
The pan-European FTSEurofirst 300 index, which had
fallen some 7 percent over the last two weeks, rose 1 percent to
1,319.26 points. The euro zone's blue-chip Euro STOXX 50 index
also rose 1.1 percent to 3,038.73 points. Germany's
DAX outperformed, rising 1.5 percent.
Worries about the impact of Western sanctions against Russia
had pushed the DAX down by around 11 percent from a record high
of 10,050.98 points in late June, since many top German
companies have significant business ties to Russia.
RALLY COULD BE FRAGILE
The situation on the ground in Ukraine remains uncertain,
though, so any relief rally could be fragile.
Ukrainian forces were preparing to recapture the city of
Donetsk from pro-Russian separatist rebels, a military spokesman
said on Monday. This weekend, U.S. President Barack Obama and
German Chancellor Angela Merkel agreed that any Russian
intervention in Ukraine - even for 'humanitarian' reasons -
would provoke `additional consequences.'
"The 10 percent correction in Europe has brought some nice
buying opportunities, and the market was clearly oversold on
Friday. But this is mostly a technical bounce, which should last
just a few days," said Arnaud Scarpaci, fund manager at
Paris-based Montaigne Capital.
Euro zone banking shares - recently hit by the bailout of
Portugal's Banco Espirito Santo - featured among the
top gainers on Monday. Banco Popolare rose 8.3 percent
after Italy's fourth-biggest bank reported
stronger-than-expected quarterly results.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Larry King)