Ukraine Crisis: Rising Tensions Leave Investors Cautious

Rising tension over Ukraine shaved off some of Britain's stock market value as pro-Russian forces continue to occupy government buildings.

The political stand-off over Ukraine hampered risk appetite in Europe, while reports of a slowdown in China added to the negative mood.

FTSE Eurofirst 300 index was down 0.52% at 1313.53 points at 1036 BST, with brewer SABMiller, cosmetics group L'Oreal and foods giant Nestle's posting weak sales reports.

Meanwhile at a meeting in Luxembourg, European leaders said they are considering further sanctions against individuals with close ties to the Kremlin, while Washington has hinted at broader economic sanctions against whole sectors of the Russian economy.

Ukraine's interim president threatened a military crackdown on the pro-Russian militias, after they ignored Kiev's deadline to vacate their positions in towns and cities in Ukraine's east.

Western leaders described the situation in eastern Ukrainian cities as a Russian plot to carve up Ukraine.

Pro-Russian militias in Slaviansk called for help from Russian President Vladimir Putin, after Kiev failed to follow up on its threat to evict them from government buildings on Monday morning.

While the West is discussing further sanctions against Moscow no specific measures were announced as they hope a breakthrough can be achieved at talks in Geneva.

Foreign ministers from the US, EU, Ukraine and Russia are due to meet on Thursday to discuss the way forward for Ukraine's interim government.

While European leaders have shown reluctance to expand sanctions beyond individuals, Washington has shown a greater appetite for targeting the Russian economy with broader penalties.

US President Barack Obama has signed an executive orders that "allow for all kinds of different sanctions," White House Press Secretary Jay Carney told reporters. He did not mention specifics when pressed, but the US is thought to be considering sanctions against more individuals and the energy, financial services, engineering and defence sectors of the economy.

"If there is any sort of announcement that there are going to be further curbs from the West, we'd expect the market to drop off again," Stuart McDonald, a sales trader at IG.