European stocks fall back as data shows Ukraine strain

LONDON (Reuters) - Crude oil hit a nine-month low on Tuesday as ample supply outweighed concern violence in the Middle East could disrupt output, easing the impact on investors of a fall in some European shares.

German shares fell on Tuesday and the euro weakened against the dollar after a gauge of economic sentiment in Europe's biggest economy hit its lowest since December 2012, reflecting the impact of the Ukraine crisis.

Wall Street looked set to open flat to slightly higher, according to stock index futures.

Brent crude fell more than $1 to less than $104 a barrel, its lowest since November.

The International Energy Agency (IEA) said that while the situation in several key oil-producing countries "remains more at risk than ever", supplies were ample.

Investors are closely following events in Iraq, where the president named a new prime minister on Monday to replace Nuri al-Maliki and the United States has bombed Islamic State insurgents.

"In terms of the physical side of things, particularly for Brent, there are pretty high inventories at the Atlantic Basin at the moment and that's holding back gains," said Ankit Pahuja, a commodity strategist at investment bank ANZ.

In another crisis troubling investors, Moscow said a convoy of 280 trucks carrying humanitarian aid set off for Ukraine, a day after the head of NATO warned against using offers of help as a pretext for invasion.

Germany's DAX index fell 0.7 percent, underperforming the pan-European FTSEurofirst 300 index, which was down just 0.1 percent.

"The drop in the ZEW index confirms the near-term downside risk for the German and euro zone economies emanating from the Ukraine crisis," said Berenberg Bank economist Christian Schulz.

"That does not change the fundamentally positive outlook, however. Germany remains in a strong position to capitalize on any sentiment improvements once the Ukraine crisis fades from the headlines, and many euro zone countries are enjoying the benefits of their reforms."

The euro fell as low as $1.3337, just above a nine-month low of $1.3333 hit last week, as the plunge in German investor morale exacerbated worries about a slowdown in the euro zone's economic recovery.

"The sentiment survey is consistent with some of the loss in momentum we have seen for the German economy and does not bode well for the euro zone," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

Russian shares fell, reversing big gains on Monday. The dollar-denominated RTS index lost 0.8 percent while the rouble-based MICEX fell 0.2 percent. The rouble was 0.66 percent weaker against the dollar at 36.14.

Things had looked less bearish in Asia. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent, adding to Monday's 1.5 percent gain. Tokyo's Nikkei stock index firmed 0.2 percent.

The dollar edged higher against other major currencies, helped by a slight rise in U.S. Treasury yields, though the geopolitical tensions that have dominated financial markets in recent weeks were expected to restrict gains.

The U.S. currency edged up 0.1 percent to 102.27 yen, having hit a two-week low of 101.51 yen on Friday.

U.S. 10-year Treasury notes yielded 2.43 percent, up a shade from New York closing levels.

Yields on German government debt, the euro zone benchmark, edged down less than a basis point to 1.057 percent. German yields touched a series of record lows in recent days as investors sought assets perceived as safe havens, before rebounding on Monday.

Gold firmed as equities fell. It last traded at just over $1,311 an ounce.

(Additonal reporting by Anirban Nag, Jan Harvey and Jason Neely in London and Wayne Cole in Sydney; Editing by Ruth Pitchford)

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