* Global stock index falls, with U.S. stocks down more than 1 percent
* Ukraine tensions increase; China data adds to more worries about slowdown
* Russian shares slide to lowest since September 2009
By Caroline Valetkevitch
NEW YORK, March 13 (Reuters) - World stock indexes dropped and the yen climbed against the dollar and euro on Thursday as concerns increased over the trajectory of the crisis in Ukraine.
Concerns about the pace of Chinese growth added to pressure on stocks as well as copper. China accounts for 40 percent of global refined copper demand.
Major U.S. indexes dropped more than 1 percent, with losses accelerating after reports U.S. F-16 fighter jets landed at central Poland’s Lask air base to take part in military exercises in a gesture of support for Washington’s eastern NATO allies.
Russia said it had started military exercises near the border with Ukraine, in what is likely to be seen as a show of force in the standoff with the West over the Crimea region.
Meanwhile, German Foreign Minister Frank-Walter Steinmeier said Germany assumes this weekend’s referendum in Crimea will be followed by steps to absorb the region into Russia, and if there is no change in direction the European Union will be forced to consider a further, third stage of sanctions.
While investors nervously monitored the crisis in Ukraine, their appetite for riskier assets was also diminished by fears of slowing economic growth in China.
“(Ukraine headlines) are certainly going to be the catalyst but there is more under the surface,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services.
Growth in China’s industrial output came in below forecasts for the combined January/February period, with retail sales also weaker than expected, stoking worries growth there could slow as Beijing pushes for economic reforms.
On Wall Street, the Dow Jones industrial average fell 207.75 points or 1.27 percent, to 16,132.33, the S&P 500 lost 20.4 points or 1.09 percent, to 1,847.8 and the Nasdaq Composite dropped 64.167 points or 1.48 percent, to 4,259.164.
The MSCI global stock market index was down 0.8 percent, while the pan-European FTSEurofirst 300 ended down 1.1 percent.
Russia’s RTS stock index, down 2 percent, fell to its lowest since September 2009, while five-year credit default swaps rose 14 basis points to their highest since June 2012.
Often seen as a safe-haven investment, the yen rose after U.S. Secretary of State John Kerry signalled a possible response from the West if the referendum in Ukraine’s Crimea region goes ahead on Sunday.
The yen was up nearly 1 percent against the dollar at 101.75 yen after hitting a one-week high at 101.70.
The euro slumped to session lows against the dollar and yen after comments from the European Central Bank chief signalling he remained open to more action to avert the crippling effects of deflation. More ECB stimulus aimed to help the euro zone economy is seen eroding the purchasing power of the common currency.
The euro fell 0.4 percent at $1.3850, erasing earlier gains that propelled it to a 2-1/2-year peak of $1.3967. Against the yen, the euro sank 1.3 percent to one-week lows, and last traded at 140.96 yen.
The euro zone economy has been picking up steam and investors have been speculating the ECB would not ease policy further to counter deflation risks.
In the U.S. bond market, longer-dated U.S. Treasuries rallied to their highest price levels in over a week on heightened tensions in Ukraine.
The benchmark 10-year U.S. Treasury note last traded up 19/32 in price to yield 2.658 percent, down from 2.726 percent late on Wednesday. Bond yields move inversely to their prices.
Three-month copper on the London Metal Exchange (LME) closed at $6,415 from $6,505 on Wednesday. Prices hit a 44-month low of $6,376.25 in intraday trade on Wednesday before recovering at the close to post their first daily gain since Friday.
Hefty losses for the metal earlier this week have pushed the price 12 percent lower for the year. It has lost more than 8 percent of its value since Friday on fears of an economic slowdown and credit problems in China.
“The industrial production data has further reinforced the concerns that the threat is becoming more real and the recent policies by the PBOC are failing to rebalance their economy,” said Naeem Aslam, chief market analyst at Ava Trade, referring to the Chinese central bank.
Gold prices retreated from six-month highs after the release of stronger-than-expected U.S. data.
Spot gold was little changed at $1,367.24 an ounce versus $1,366.58 late on Wednesday. U.S. gold futures for April delivery were down $2.50 an ounce at $1,368.
Earlier, gold had risen to its highest since Sept. 10, due to fears the Ukraine situation could escalate, worries over the Chinese economy, and a drop in the dollar against the euro.
In the energy market, the weak data from China pressured European benchmark Brent crude oil. It was down 69 cents at $107.33 a barrel, while U.S. crude futures rose 21 cents to settle at $98.20.