EUROPE MARKETS: European Stocks Struggle As Ukraine Uncertainty Hovers

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- Most European stocks were slightly lower Tuesday, with the conflict in Ukraine among the factors weighing on the market.

The Stoxx Europe 600 index had opened fractionally higher, but then slipped 0.1% to 329.64. The index on Monday rose 0.3%, the move solidified after U.S. stocks opened higher after days of sharp declines.

Ukraine remained in focus Tuesday as a military operation to win back control of eastern Ukrainian cities from pro-Russian activists was launched. Interim President Oleksandr Turchynov told Ukraine's parliament that overnight "an antiterrorist operation" began in the north of Donetsk, according to Russian news agency Interfax.

The crisis in Ukraine appears to have hurt investor confidence in Germany, Europe's largest economy, said the Center for European Economic Research, or Zew institute on Tuesday. Its six-month expectation index in April reached 43.2, falling from 46.6 in March, marking the fourth consecutive month of declining confidence. Analysts polled by The Wall Street Journal were looking for an April reading of 45.0.

Momentum picked up in Germany's economy at the start of the year, but the "cautious expectations in this month's survey are likely to be caused by the Ukraine conflict, which still creates uncertainty," said the ZEW institute.

Germany's DAX 30 index was down 0.3% at 9,311.58, slightly narrowing losses after the sentiment survey was released.

On the Stoxx 600, shares of Banca Monte dei Paschi di Siena SpA stood out as the worst performer on the index, falling 8.5%. The struggling Italian lender is considering raising up to 5 billion euros ($6.91 billion) in a share sale, more than the 3 billion euros it previously planned to raise. The company needs to repay a government loan of EUR4.1 billion, and if the share sale doesn't occur this year, the bank faces nationalization.

At the same time, Nestlé SA shares picked up 0.5% after the food producer said first-quarter sales fell 5.1% on weakness in two key regions and a strong Swiss franc. Drug maker Roche Holding AG also flagged the impact of the strong Swiss currency, posting a 1% decline in first-quarter revenue as it hurt the value of growing sales of Roche's cancer drugs. Excluding the currency impact, sales rose 5%. Roche shares were up 0.4%.

The U.K.'s FTSE 100 fell 0.2% at 6,573.33, though Imperial Tobacco Group tacked on 0.9% after the company said 900 jobs will be lost as part of its restructuring effort.

But France's CAC 40 was higher by 0.2% at 4,394.63, headed by a 2.4% rise for L'Oreal SA . The shares climbed 2.8% on Monday after the cosmetics firm forecast a rise in sales and profit this year. Its revenue for the first quarter fell 2.2% on a year-over-year basis, dented by weak currencies in its markets.

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