* European shares, euro dip to add to recent falls
* Russian troop build-up, sanctions check risk appetite
* Investors seek shelter in safe-haven bonds, gold
* Portugal's woes continue
* Wall Street loses early gains
(Adds oil settlement prices)
By Chuck Mikolajczak
NEW YORK, Aug 7 European shares and the euro
lost ground on Thursday and investors moved to safe-haven
government debt after a stronger-than-expected move by Russia to
ban certain imports from Europe and the United States.
Early gains on Wall Street faded, with the S&P 500 just
below its 100-day moving average, a significant technical
support level. More broadly, MSCI's world equity index
lost 0.4 percent.
German government debt yields fell to all-time lows, on
increased concern over the effect Ukraine's crisis will have on
euro zone growth. The European Central Bank said following its
monthly policy-setting meeting that a sanctions war could worsen
the growth outlook on the continent, where demand is already
The ECB elected to hold borrowing rates at record low levels
on Thursday. Europe's main bourses closed lower, with London's
down 0.6 percent, Germany's DAX off 1 percent
and France's CAC 40 down 1.4 percent. The move for the
DAX put the index down 10 percent from its record closing high
in early July.
"Geopolitical risks are heightened, are higher than they
were a few months ago. And some of them, like the situation in
Ukraine and Russia will have a greater impact on the euro area
than they ... have on other parts of the world," said ECB head
Mario Draghi, in post-meeting comments.
Russia said on Wednesday it would ban all food imports from
the United States and all fruit and vegetables from Europe in a
stronger-than-expected answer to Western sanctions for Moscow's
support for separatists in Ukraine.
German Bunds slid to a record low of 1.069 percent
while the 10-year UK gilts yield touched a one-year
low of 2.476 percent.
Gold climbed back above $1,300 an ounce to hit a high of
$1,313.60, breaking through technical resistance that could spur
further gains, and 10-year U.S. bond yields touched near a
two-month low at 2.43 percent.
The tensions have, however, aided the ECB's efforts to push
down the euro. The shared currency was hovering just above a
nine-month low against the dollar at $1.3363.
Portuguese stocks, slumped 2.3 percent, and bonds
were again showing significant weakness amid
worries the country and its banks will have to pay dearly for
the rescue of Banco Espirito Santo.
U.S. stocks succumbed to concerns over Russia after a higher
opening as initial enthusiasm from an unexpected drop in jobless
The Dow Jones industrial average fell 82.55 points or
0.5 percent, to 16,360.79, the S&P 500 lost 11.5 points
or 0.6 percent, to 1,908.74 and the Nasdaq Composite
dropped 20.26 points or 0.47 percent, to 4,334.79.
"Europe traded sharply lower after the ECB press conference.
U.S. equities again provided a counterbalance to that risk-off
trade by largely maintaining a fairly tight trading range and
stability," said Peter Kenny, chief market strategist at
Clearpool Group in New York.
"I look at this as the glass half-full, for sure, if you
stop to consider the DAX closed in correction territory and we
are off incrementally."
As fighting has intensified on the ground in eastern
Ukraine, NATO said Moscow had massed around 20,000 combat-ready
troops on the Ukrainian border and warned of a possible advance.
Russia's dollar-denominated RTS index, which is down
nearly 9.3 percent over the past three weeks, lost 0.3 percent
while its rouble-based MICEX shed 0.1 percent, giving it
a 6.3 percent decline over the same period.
U.S. crude settled up 42 cents to $97.34 while Brent
broke through the $105 mark to settle up 85 cents at
$105.44 per barrel.
(Additional reporting by Rodrigo Campos; Editing by Nick