European stocks fall back as data shows Ukraine strain

Credit: Reuters/Issei Kato/Files

Employees of the Tokyo Stock Exchange (TSE) look at a monitor at the bourse at the TSE in Tokyo March 3, 2014.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS added 0.3 percent after jumping 1.5 percent on Monday. Japan's Topix .TOPX rose 0.4 percent, while the Nikkei .N225 firmed 0.3 percent.

The better mood came even though NATO chief Anders Fogh Rasmussen warned of a 'high probability' that Russia, using the guise of a humanitarian mission, could intervene militarily in Ukraine.

Ukraine has also said that, contrary to Russian reports of de-escalating, Russia has massed 45,000 troops on its border.

Investors also monitored Iraq, where the United States recently began air strikes targeting Islamic State fighters marching on the country's Kurdish capital.

In Baghdad, the political showdown continued as Nuri al-Maliki refused to bow to U.S. and Iranian pressure to step aside after Iraq's president named a less polarizing prime minister.

None of this seemed to faze Wall Street, where the Dow .DJI rose 0.10 percent, while the S&P 500 .SPX gained 0.28 percent and the Nasdaq .IXIC 0.70 percent.

Eight of the S&P's 10 primary sector indexes ended higher. Consumer staples shares posted the highest increases as the sector's index .SPCOMS rose 0.8 percent, while energy and utilities shares dragged.

Shares of Kinder Morgan Inc (KMI.N), the biggest U.S. pipeline company, jumped 9 percent on news it would put all its publicly traded units under one roof in a $70 billion deal.

An MSCI index of stocks in top developed and emerging countries .MIWD00000PUS rallied 0.8 percent on Monday, the most for any day in four months, though it was still down more than 3 percent from a record closing high set early in July.

The pan-European FTSEurofirst 300 index .FTEU3 jumped 1.3 percent after losing 2 percent last week.

Yet there was enough of a safe-haven bid to keep Treasuries underpinned with yields on U.S. 10-year paper US10YT=RR at 2.429 percent, not far from last week's 14-month lows.

Major currencies were fenced in narrow ranges, with the U.S. dollar index flat at 81.470 .DXY after drifting in a 82 tick-range on Monday, a far cry from Friday's 336 tick-range.

The dollar bought 102.22 yen JPY=, off Friday's low of 101.51, while the euro fetched 136.82 yen EURJPY=R, still well off a trough of 135.73 plumbed on Friday.

Geopolitical concerns and sanctions against Russia will probably be reflected in a closely watched survey on German morale due later in the day, analysts at BNP Paribas said.

'We expect the headline expectations measure to fall to its lowest levels since the immediate aftermath of the EUR crisis in early 2013,' they wrote in a note to clients.

Such an outcome might keep the euro under pressure. The common currency last traded at $1.3384 EUR=, still struggling after hitting a nine-month low of $1.3333 a few days ago.

In commodities, oil prices remained in a rut amid plentiful supply. Brent crude futures LCOc1 eased 13 cents to $104.55 a barrel, while U.S. crude CLc1 lost 18 cents to $97.90 per barrel.

Spot gold XAU= was flat at $1,308 an ounce.

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