GLOBAL MARKETS-Renewed Ukraine tension deals another blow to battered stocks

Reuters - UK Focus

* Ukraine's Monday ultimatum to separatists saps risk

appetite

* 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 (Reuters) - 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 (Other OTC: GLCNF - news) , 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

West."

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.

PLAYING SAFE

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 (Xetra: CMC.DE - news) reported a 19 percent drop in Q1

profits. Both it and Wells Fargo (Berlin: NWT.BE - news) 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

April 4.

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

Fund.

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.

BULLISH BUNDS

In Asia, MSCI (NYSE: MSCI - news) '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 (Milan: BNP.MI - news) 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

to Europe.

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 (AMEX: GHM - news) -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)

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