* Report of fresh Ukraine tensions sparks market reversals
* Stocks retreat in Europe, Wall Street
* Bund yields plumb record lows below 1 pct
* Dollar strengthens versus euro
(Updates market action to midday U.S. trading)
By Herbert Lash
NEW YORK, Aug 15 Global equity markets retreated
on Friday on news that Ukraine forces had engaged a Russian
armored column on Ukrainian soil overnight, while yields on
benchmark German bunds plumbed record lows below 1 percent.
Ukraine said its forces had attacked and partly destroyed
the Russian column, a firefight that would mark a dramatic
worsening of the conflict, if confirmed.
Investors have worried about a deepening stand-off between
Ukraine and Russia, though recent signs of easing tensions had
lifted equity markets, especially in Europe.
"It is hard to know how serious this is, but any sustained
upturn in violence could lead to a short-term setback," said Jim
McDonald, chief investment strategist at Chicago-based Northern
Trust Asset Management.
Despite the decline in equities, leading U.S. stock indexes
remained on track for a second straight week of gains, and the
benchmark S&P 500 is less than 2 percent from a record closing
high set in July.
MSCI's all-country world equity index fell
0.19 percent, while the FTSEurofirst 300 index of
leading European shares fell 0.45 percent to close at 1,323.10,
after trading 0.8 percent higher earlier in the session.
Stocks also retreated on Wall Street.
The Dow Jones industrial average fell 72.73 points,
or 0.44 percent, at 16,640.85. The Standard & Poor's 500 Index
was down 4.44 points, or 0.23 percent, at 1,950.74. The
Nasdaq Composite Index was down 5.70 points, or 0.13
percent, at 4,447.30.
The safe-haven yen and Swiss franc advanced after news of
the Ukraine event. The Swiss franc hit a 19-month high against
the euro and a three-week peak versus the dollar. The yen
reversed losses against the dollar, turning higher.
The dollar was down 0.2 percent against the yen at 102.22
yen, after hitting its highest in more than a week.
The dollar last traded at 0.9029 franc, down 0.4 percent.
The euro, meanwhile, tumbled versus the Swiss franc to its
lowest since January 2013. It was last at 1.2098, down 0.1
Yields on German 10-year bunds fell to a
record low of 0.952, according to Tradeweb pricings.
Ten-year UK bond yields fell to 2.359 percent, the lowest
since August 2013, while U.S. Treasury 10-year yields
fell to 2.3327 percent.
Crude oil prices rose on the Ukraine news, after Brent had
stabilized close to a 13-month low on ample supplies of
high-quality oil and signs that faltering global economic growth
may cap fuel demand.
October Brent crude rose $1.22 to $103.29 a barrel,
while U.S. crude rose $1.15 to $96.73 a barrel.
(Reporting by Herbert Lash; Additional reporting by Nigel
Stephenson in London; Editing by Dan Grebler)