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Markets on edge ahead of Yellen testimony

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The Associated Press | May 6, 2014 12:21 PM EST | AP

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LONDON (AP) — Concerns over Ukraine weighed on markets Tuesday ahead of comments from the U.S. Federal Reserve chair Janet Yellen.

While traders remained alert to the situation in Ukraine, which have become increasingly violent, they are also getting ready to hear Yellen's latest testimony to lawmakers on Wednesday. Stronger than anticipated jobs data last week reinforced optimism over the state of the U.S. economy after a winter lull and many in the markets think the Fed may sanction an earlier than anticipated increase in interest rates.

"Caution will likely prevail ahead of testimony from Janet Yellen tomorrow," said Chris Beauchamp, market analyst at IG.

In Europe, the FTSE 100 index of leading British shares fell 0.4 percent to close at 6,798.56 while Germany's DAX fell 0.7 percent to 9,467.53. The CAC-40 in France dropped 0.8 percent to 4,428.07.

In the U.S., the Dow Jones industrial average was 0.5 percent lower at 16,443 while the broader S&P 500 index fell 0.4 percent to 1,876.75.

Earlier in Asia, China's benchmark Shanghai Composite Index was flat at 2,028.04 Tokyo, Hong Kong and Seoul were closed for holidays.

Elsewhere, the euro was buoyant, trading 0.3 percent higher at $1.3922, after a closely monitored survey from financial information company Markit confirmed activity across the business and services sectors running at 35-month high. Its composite index rose to 54.0 in April from 53.1 in March. Anything above 50 indicates expansion.

Investors will be interested to hear what European Central Bank President Mario Draghi says about the high value of the euro in his press briefing on Thursday following the bank's monthly policy meeting. Few economists think the ECB will cut interest rates or introduce new measures to shore up the economic recovery in the 18-country eurozone.

Elsewhere, the dollar was down 0.6 percent at 101.55 yen, while a barrel of benchmark New York crude was 78 cents higher at $100.26.