GLOBAL MARKETS-Ukraine tensions hit shares; Wall St little changed

Reuters - UK Focus

* Russian ruble hits 5-year low vs dollar

* Euro hits 2-week low; soft data add to uncertainty

* U.S. Treasuries yields at two-week low

* Yuan rebounds but still below PBOC fixing

By Chuck Mikolajczak

NEW YORK (Frankfurt: HX6.F - news) , Feb 27 (Reuters) - Stocks on world markets edgedlower on Thursday, as tension in Ukraine and Russia curbed riskappetite, though Wall Street managed to hold near unchanged asinvestors tuned in to Fed chair Janet Yellen's testimony inWashington.

Saber-rattling in the Ukraine grew, as armed men seized theparliament in Ukraine's Crimea region and raised the Russianflag, alarming Kiev's new rulers, who urged Moscow not to abuseits navy base rights on the peninsula by moving troops around.

The Russian ruble touched a five-year low against the dollar, while Ukraine's hryvnia fell to a record lowafter its central bank abandoned its managed exchange ratepolicy.

The geopolitical uncertainty caused investors to seek thesafety of U.S. Treasuries, driving yields totwo-week lows. The 10-year note was yielding 2.649 percent. TheJapanese yen and Swiss franc, both traditionalsafe-haven plays in foreign exchange, gained.

"There are definitely fears about geopolitics; the generalmood towards emerging markets is not great. The concern is thiscould develop into a proper civil war in Ukraine that splits thecountry," Manik Narain, strategist at UBS (Xetra: UB0BL6 - news) in London, said.

Wall Street was little changed, as comments from Yellenfailed to provide much clarity on the impact of the weather onrecent economic weakness. Data on Thursday showed orders forlong-lasting U.S. manufactured goods excluding transportationunexpectedly rose last month, as did a gauge of businessspending plans.

"Durables came in better than feared, but it is difficult totell what the weather impact was and what the impact of anactual slowdown might be," said Joseph Tanious, global marketstrategist at J.P. Morgan Asset Management in New York.

Yellen, during her testimony before the Senate, said recentdata pointed to a softening in spending in the U.S. economy thatmight be explained partly by the bad weather.

If the view holds that harsh winter weather is to blame,investors are likely to expect the Fed to keep trimming itsbond-buying program by $10 billion at each policy meeting,leaving it on track to end the bond purchases completely by theend of the year.

The Dow Jones industrial average rose 0.22 point, or0 percent, to 16,198.63, the S&P 500 gained 0.49 point,or 0.03 percent, to 1,845.65 and the Nasdaq Composite added 4.856 points, or 0.11 percent, to 4,296.92.

Shares of both J.C. Penney Co Inc and Best Buy CoInc jumped after the companies posted strong results.Penney forecast more improvement in its comparable sales andgross profit margin this fiscal year, and Best Buy (Berlin: BUY.BE - news) postedadjusted earnings that topped forecasts.

Penney surged 21 percent to $7.23 while Best Buy advanced5.4 percent to $27.22. The S&P retail index

The MSCI world equity index, which tracksshares in 45 nations, slipped 0.20 point, or 0.05 percent, to407.16.

The sharpening rhetoric in Ukraine held down Europe's mainmarkets, which lost 0.4 percent. In Germany the DAX fell 1 percent for the biggest drop since Feb. 3, whilethe euro dropped to a two-week low of $1.3641.

There was plenty of additional pressure for the euro.Spain's fourth-quarter gross domestic product figures wererevised downward, and ECB data showed little improvement in theamount of credit reaching euro-zone firms.

German inflation figures suggested there would be scantpick-up in euro-zone inflation, which is to be published onFriday.

The ECB meets next week and is under pressure to cutinterest rates again and dip back into its unconventional policycupboard to ensure the euro zone doesn't become mired indeflation.

In bond markets, the possibility that more moves are comingfrom the ECB and a strong debt auction in Italy helpedlower-rated Italian and Spanish debt keep pace with safe-havenGerman Bunds.

Among commodities, copper dropped to a three-monthlow below $7,000 a tonne, extending its losses over the pastweek on recent concerns about slower growth in China.

Gold prices edged up due to a steady dollar, but remainedwell below the previous day's four-month high as buyers ofcoins, bars and jewelry in Asian markets held off in expectationof a further price drop. Spot gold advanced 0.2 percent$1,333.50 an ounce, off Wednesday's high of $1,345.35.

After recent falls, the yuan saw a second day ofrelative calm, standing at 6.1279 per dollar, just offWednesday's low of 6.1351. A bounce in Chinese shares helpedAsian shares gained 0.3 percent.

Dealers suspect the People's Bank of China has engineeredthe recent decline in the country's currency to inject moretwo-way volatility into the market and wrong-foot speculatorswho had bet on its continued rise.

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