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Ukraine crisis roils markets in Europe

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PAN PYLAS | February 27, 2014 10:14 AM EST | AP

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LONDON (AP) — An escalation in tensions in the Ukrainian region of Crimea rocked European markets on Thursday before a relatively calm opening on Wall Street helped to ease the nerves.

Worries that the crisis in Ukraine was spreading accentuated soon after Europe's markets opened following reports that dozens of heavily armed pro-Russia gunmen seized control of local government buildings in Crimea.

With Russia scrambling fighter jets to patrol its border and reportedly giving shelter to Ukraine's fugitive president, investors in Europe grew concerned that the crisis was taking a new, more dangerous turn.

Over the past couple of weeks, investors had monitored developments in Ukraine with a degree of nonchalance. Now they are worrying that Russia may be drawn in. Geopolitical concerns tend to prompt investors to search out the sanctuary of safe haven assets such as gold and the dollar in place of stocks.

"The situation in the Ukraine remains uncertain and unstable," said Nick Bennenbroek, an analyst at Wells Fargo Bank.

That was particularly evident in Ukraine and Russia. The Ukrainian currency, the hryvnia, was down 10 percent at 11 per U.S. dollar, having earlier touched a record low of 11.25. In Russia, the RTS stock index was down 2.1 percent.

Elsewhere in Europe, Germany's DAX was down 1 percent at 9,567, while Britain's FTSE 100 fell 0.1 percent at 6,791. The CAC-40 in France was 0.4 percent lower at 4,379.

Shares across Europe's main indexes had been trading far lower earlier in the session before a solid start on Wall Street in the wake of upbeat earnings from the likes of J.C. Penney and Best Buy contained the selling . The Dow Jones industrial average was down 0.1 percent at 16,182 while the broader S&P 500 index fell the same rate to 1,844.

In other markets, there was also a calmer mood following the U.S. open, with the price of an ounce of gold up 0.3 percent to $1,332 and the euro steady at $1.3685.

While keeping an eye on developments in Ukraine, investors will also be monitoring comments later from the Federal Reserve chair Janet Yellen to the Senate's Banking Committee. Stocks jumped on Feb. 11 when Yellen reassured Congress over the central bank's market-friendly, low-interest rate policies.

Earlier in Asia, shares were mixed with most of the news reports over Crimea coming after the close.

Hong Kong's Hang Seng gained 1.7 percent to 22,828.18 and Seoul's Kospi added 0.4 percent to 1,978.43. Markets in Southeast Asia were also mostly higher and China's Shanghai Composite added 0.3 percent to 2,047.35. Japan's Nikkei 225 stock index edged 0.3 percent lower to 14,923.11.