* Ukraine's Monday ultimatum to separatists saps risk
* European stocks down as sell-off continues
* Wall Street eyes first big week of Q1 earnings
* Euro undermined by ECB officials' talk of more easing
* Japan's Nikkei marks fresh 6-month closing low
* Yen, gold bolstered as investors seek safety
By Marc Jones
LONDON, April 14 There was no let-up for bruised
share markets on Monday as growing fears of a military conflict
in Ukraine followed last week's heavy sell-off on Wall Street,
Tokyo and major European exchanges.
Ukraine's president threatened military action after
pro-Russian separatists occupying government buildings in the
east ignored an ultimatum to leave and another group of rebels
attacked a police headquarters in the region.
For financial markets that meant yet more uncertainty. Asian
markets had conceded more ground overnight, and Europe followed
suit with the pan-regional FTSEurofirst 300 down 0.4
percent as U.S. trading approached.
A flurry of M&A activity, including a $6 billion copper mine
sale from Glencore Xstrata, helped cushion the falls,
which were driven by a 0.6 percent decline in the Dax.
German-listed firms have some of the biggest links to Russia.
"The escalation sharply increases risks of an all-out civil
war in Ukraine," said Bank of America Merrill Lynch analysts in
a research note.
"Even though it is still not our baseline scenario, the
entire development is clearly negative for the market (and
raises) renewed fears of another wave of sanctions from the
Russian markets also tumbled. The rouble and
Moscow's main stock market were down around 0.7 and 1.5
percent, while the country's key bonds stayed under pressure as
the cost of insurance against default increased.
European Union foreign ministers will hold talks later on
Monday about tougher sanctions against Russia.
The worry for many is that the two sides end up imposing
increasingly tough measures that will inevitably harm both.
S&P 500 e-mini futures pointed to another subdued
start for Wall Street later. Last week's turbulence buffeted
global markets and saw the tech and biostock-dominated Nasdaq
take its biggest tumble since 2012.
The falls have centred on concerns that some stocks may have
risen too far too fast over the last year.
Earnings season will shift up a gear this week. Ahead of the
open, JPMorgan Chase reported a 19 percent drop in Q1
profits. Both it and Wells Fargo kick off
a host of big-name banks releasing figures this week.
In the currency market, the low-yielding yen benefited from
the heightened risk aversion. The dollar nudged up to 101.72 yen
after touching a 3-1/2-week low of 101.32 yen on Friday,
but that was far from the 2-1/2-month high of 104.13 yen set on
More promises from the European Central Bank over the
weekend that it will take action to head off further gains in
the euro also tugged the shared-currency back to $1.3825 from
Friday's high of $1.3905.
"The strengthening of the exchange rate would require
further monetary policy accommodation," ECB head Mario Draghi
said at a meeting of the International Monetary
Benoit Coeure, another top ECB member, also laid out some
asset-buying options, a tactic which appears to be finally
gaining traction at the central bank.
In Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan had shed 0.5 percent, pulling
further away from five-month highs hit on Thursday.
Japan's Nikkei stock average ended down 0.4 percent
at a fresh six-month closing low. It plunged 7.3 percent last
week, its biggest weekly fall since the devastating earthquake
and tsunami in March 2011.
"Some are worried that a U.S. bubble in the equities markets
might be corrected, because of the ongoing tapering" of monetary
stimulus by the U.S. Federal Reserve, said Kyoya Okazawa, head
of global equities at BNP Paribas in Tokyo.
Among commodities, spot gold benefited from the move
towards safe-haven assets, adding about 0.4 percent to $1,323 an
ounce, after earlier marking a new three-week high.
U.S. crude for May delivery steadied at $103.78 per
barrel and Brent crude eased back after it had risen
above $108.20, bolstered by fears that the Ukraine situation
could escalate. Ukraine is a major supply route for Russian gas
In Europe, government bonds were the big beneficiaries of
the geopolitical uncertainty, also responding to Draghi's
comments. Bund yields dipped to a 10-month low, while most
periphery euro zone bonds also made ground.
"It's a pretty bullish day for core (bonds)," said Lyn
Graham-Taylor, rate strategist at Rabobank. "The overall message
was that the ECB doesn't know what QE (quantitative easing)
would look like, but they see it as a viable policy option."
(Additional reporting by Marius Zaharia in London and Megan
Davies in Moscow; Editing by John Stonestreet)