* 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 seen up 0.1 pct
* Aussie dollar dives after surprise jump in jobless rate
By Marc Jones
LONDON, Aug 7 The first Russian riposte in a
sanctions tussle with the West over Ukraine kept European shares
and the euro under pressure on Thursday, as markets wait to hear
how the European Central Bank sees the crisis affecting the
Stocks in the region were on edge as a week-long slide,
which has also seen nervy investors drive yields on safe-haven
German government debt to all-time lows, showed only tentative
signs of easing.
Russia said on Wednesday it would ban all food imports from
the United States and all fruit and vegetables from Europe, in a
sweeping response to Western sanctions for Moscow's support for
separatists in Ukraine.
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.
Russian shares, which have lost almost 20 percent in the
last three weeks , took another 2 percent hit,
followed by Europe's main bourses in London, Frankfurt
and Paris which were down 0.1-0.3 percent in
"The magnitude of the impact of the sanctions is hard to
judge because we don't know how long they will be in place or
whether there are ways that companies can get around them," said
Kerry Craig, a global markets strategist at J.P. Morgan.
"I think investors are also looking at the general loss of
momentum in the (European) economy we have seen in the last
couple of months, looking at the world around them and adjusting
their portfolios accordingly."
As German Bund yields hit their latest record low of the
week and gold jumped back above 1,300 an ounce, the focus turned
to what should normally be the European Central Bank's least
eventful meeting of the year.
The Bank kept its interest rates at all-time lows as widely
expected but markets will be keen to see what impact it thinks
the tensions with Russia will have on an already fragile euro
zone economy and worryingly low inflation.
The tensions have, however, aided the ECB's efforts to push
down the euro. Ahead of the bank's 1230 GMT news conference, the
shared currency was hovering just above a nine-month against the
dollar and six-month low and the yen at $1.3372
and 136.77 yen respectively.
Also of interest to the ECB will be the fresh squalls in
some debt-strained parts of the euro zone.
Portuguese stocks and bonds were
again the bloc's biggest fallers on Thursday amid worries the
country and its banks will have to pay dearly for the rescue of
Banco Espirito Santo.
While a lot of noise has been made about Russia's troubles,
Lisbon's stock market has plunged almost 30 percent since early
June and Athens in Greece has lost close to 20 percent.
"The euro zone is at a crossroads and the economy can go
either way," said James Knightley, an economist with ING.
Futures prices pointed to a slightly positive restart
for U.S. markets on Wall Street but investors had also sold
Asian stocks overnight having flocked into bonds and gold.
Despite Russia's importance as a producer, oil continued to
slide too with U.S. crude Brent both at six-month
lows at $96.69 and $104.36. per barrel respectively.
Sentiment had soured further in Asia after the Australian
dollar, seen as a barometer of risk appetite, sank after
Australia's unemployment rate jumped unexpectedly to a 12-year
high, sparking talk of an interest rate cut there.
MSCI's broadest index of Asia-Pacific shares outside Japan
dropped 0.3 percent though Japan's Nikkei
average bucked the trend following a Reuters report that
its public pension fund will increase allocations to stocks.
As the nervy global mood hit confidence, 10-year U.S. bond
yields hovered near a two-month low at 2.45 percent.
German Bunds slid to a record low of 1.086 percent
while the 10-year UK gilts yield touched a one-year low of 2.503
The Bank of England, which many investors believe will be
the first of the world's major central banks to raise interest
rates, also made no changes after its monthly meeting.
The Bank issued no statement either and investors will now
have to wait nearly two weeks to know if any of its members
voted in favour of raising rates for the first time in more than
three years. The suspicion is one that might have.
(Additional reporting by Hideyuki Sano in Tokyo and Marius
Zaharia in London, editing by John Stonestreet/Ruth Pitchford)