European shares fall on Ukraine jitters; investors seek weekend protection
* FTSEurofirst 300 down 0.9 pct; Euro STOXX 50 down 1.1 pct
* Stocks exposed to Russia under renewed pressure
* DAX puts rise; German index seen most vulnerable
* U.S. investors still pouring money into Europe -Lipper
(Updates with detail, quote, prices)
By Alistair Smout
LONDON, March 7 (Reuters) - European shares fell on Friday,
amid growing tension over Crimea, as investors tried to shield
themselves from any confrontation between Russia and Ukraine on
the weekend.
Above-forecast jobs data from the United States briefly
helped shares pare losses. But they turned sharply lower again
on reports that a U.S. warship was entering the Black Sea.
The U.S. military said the planned exercise was routine.
Even so, the reaction showed how volatile the market could be
when news broke about Crimea. [ID:nL6N0M417H]
"People are a little bit nervous to go into the weekend with
fully loaded long positions, given the ongoing Ukraine crisis,"
said Zeg Choudhry, the head of trading at Northland Capital
Partners.
A deteriorating geopolitical situation last weekend saw
stocks fall 2.3 percent on Monday. A 6.8 percent pick-up in
volatility <.V2TX> - a crude indicator of investor fear -
indicated growing demand for protection, and thus a higher price
to shield against future swings.
Diplomatic efforts to cool the crisis in Ukraine calmed
markets over the past few days. Then tensions rose again, with
U.S. President Barack Obama ordering visa bans and asset freezes
for unidentified but presumably Russian people who were deemed
responsible for threatening Ukraine's sovereignty.
[ID:nL6N0M40G6]
Russian President Vladimir Putin rebuffed the warning by
Obama on Friday, saying that Russia could not ignore calls for
help from Russian speakers in Ukraine.
Germany's DAX index <.GDAXI> - considered the most
vulnerable to tensions in Ukraine and Russia - fell 1.1 percent.
Investors have piled into the options market for protection
against any future fall in the DAX, with Eurex data showing a
rise in the ratio between "put" and "call" options. Puts are a
bet on a fall in the DAX; calls a bet on a rise. The put/call
ratio on DAX options due to mature in March jumped to 3.13 at
the start of March from 1.47 in early February [ID:nL6N0M24FH]
At 1526 GMT, the FTSEurofirst 300 <.FTEU3> index of top
European shares was down 0.8 percent at 1,334.00 points.
European blue chips exposed to Russia and Ukraine came under
renewed pressure. Nokian Renkaat <NRE1V.HE> fell 1.7 percent,
Raiffeisen Bank International <RBIV.VI> 2.9 percent and
Carlsberg <CARLb.CO> 0.6 percent. The three companies get 26
percent, 22 percent and 17 percent respectively of their
revenues from Russia, according to data from MSCI.
For a list of blue chips with the biggest exposure to Russia
and Ukraine, click on: [ID:nL6N0M0314][ID:nL6N0M02YG]
Stocks briefly recovered after U.S. jobs data beat
forecasts, which could ease fears of an abrupt slowdown in
economic growth and support the Federal Reserve's decision to
reduce its monetary stimulus. [ID:nL1N0M324P]
Employers added 175,000 jobs to their payrolls last month,
compared with a consensus prediction of 149,000 in a Reuters
poll. Economists said poor weather in February could mean the
underlying health of the economy was even stronger.
"The weather is playing havoc with the US data," Rob Wood,
economist at Berenberg, said. "Today's figures are probably
still distorted by the snow, meaning that the underlying
position could be better than the headline suggests."
Europe bourses in 2014: http://link.reuters.com/pad95v
Asset performance in 2014: http://link.reuters.com/rav46v
Today's European research round-up [RCH/EUROPE]
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