Putin comments help European shares to bounce back

Reuters - UK Focus

* FTSEurofirst 300 ends 0.7 pct higher after early losses

* Putin's comments trigger relief rally

* Italy's FTSE MIB index outperforms

By Atul Prakash

LONDON, March 18 (Reuters) - European shares changed courseto climb higher in late trading on Tuesday after comments fromRussian President Vladimir Putin eased concerns that tensionsover Ukraine will escalate.

The stock market witnessed a relief rally after Putin,defying Ukrainian protests and Western sanctions, signed atreaty on Tuesday making Crimea part of Russia but said he didnot plan to seize any other regions of Ukraine.

That raised expectations the market will resume its recentrally after tumbling on the geopolitical tensions in Ukraine andconcerns about a slowdown in China.

The pan-European FTSEurofirst 300 index closed 0.7percent higher at 1,306.11 points, recovering from an earliersession low of 1,290.28. It fell more than 5 percent in aboutone week from a near 5-1/2-year high earlier this month and isstill down 1 percent this year after surging 16 percent in 2013.

"The market has been rightly very worried that Putin's nextmove was some of the other eastern provinces of Ukraine,"Macquarie strategist Daniel McCormack said. "If he is wateringdown expectations in that regard, that's obviously positive."

The biggest crisis between Russia and the United Statessince the end of the Cold War is likely to keep investorscautious, however.

Late on Monday, the United States and the European Unionimposed personal sanctions on a handful of officials from Russiaand Ukraine who were accused of involvement in Moscow's militaryseizure of the Black Sea peninsula.

"There is still a lot of uncertainty," said Frank Bonsee,equity sales trader at ABN AMRO, adding that market could tradesideways in the near term.

"There are still a lot of questions to be answered. Whatcould be the next round of sanctions? How tough that could be?"

Around Europe, Italy's FTSE MIB outperformed somemajor markets and was 0.9 percent higher after hitting athree-year peak earlier in the session as investors bet on aneconomic recovery in the euro zone's periphery. Germany's DAX also rose 0.7 percent.

"The pairs trade 'short DAX' and 'long euro zone peripherystocks' has worked pretty well, with the MIB particularlystrong," Societe Generale (Paris: FR0000130809 - news) 's head of equity derivatives strategyVincent Cassot said.

On the downside, Sweden's Kinnevik, an investorin online fashion retailer Zalando, and British clothes chainNext (Dusseldorf: NXG.DU - news) fell 3.8 percent and 2.2 percent respectively afterbelow-expectations earnings from UK-listed ASOS (LSE: ASC.L - news)darkened the outlook for the sector.

Truck maker Scania (Other OTC: SVKBY - news) fell 2.1 percent after boardmembers responsible for assessing a takeover bid by Volkswagen (Berlin: VOW.BE - news) for its outstanding shares said the offer was toolow and recommended that minority shareholders reject it.

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