Global stocks, bond yields fall as Ukraine crisis deepens

NEW YORK, Aug 28 (Reuters) - Stock markets around the world fell on Thursday after Ukraine said Russia moved more troops into the country, escalating the risk of the region's crisis spreading, as nervous investors shifted money into gold and U.S. and German government bonds.

The euro hit a 21-month low against the Swiss franc and fell against the yen as worries about intensified fighting between the Ukrainian military and pro-Russian separatists drove investors to seek safe-haven currencies.

Ukrainian President Petro Poroshenko said Russian forces had entered Ukraine, and he convened his security and defense council to decide how to respond.

"Geopolitics is driving the market again, and this latest escalation in Ukraine comes as European stocks were ripe for a pull-back," said Alexandre Baradez, chief market analyst at IG France.

The tensions put riskier assets firmly under pressure with the Standard & Poor's 500 index <.SPX> falling below the 2,000 threshold following a record close on Wednesday.

In midday U.S. trading, The Dow Jones industrial average <.DJI> fell 52.24 points, or 0.31 percent, to 17,069.77, the S&P 500 <.SPX> shed 3.99 points, or 0.2 percent, to 1,996.13 and the Nasdaq Composite <.IXIC> declined 10.15 points, or 0.22 percent, to 4,559.47. [.N]

The pan-European FTSEurofirst 300 index <.FTEU3> snapped its three-day winning streak, falling 0.7 percent at 1,369.15 points. Tokyo's Nikkei closed down 0.5 percent at 15,459.86. [.EU] [.T]

The MSCI world equity index <.MIWD00000PUS>, which tracks shares in 45 nations, fell 1.81 points or 0.42 percent, to 430.44.

Meanwhile, ten-year German Bund yields hit a record low of 0.868 percent, and 30-year U.S. bond yields touched 3.059 percent, the lowest in 14 months. [GVD/EUR] [US/]

Bond yields worldwide have fallen in recent days as traders bet on new stimulus from the European Central Bank as soon as next week in a bid to avert deflation in the euro zone.

German inflation came in at a steady 0.8 percent ahead of Friday's euro zone number. Corresponding Spanish figures saw a slightly smaller-than-forecast drop as revised second quarter GDP held steady.

These weak inflation readings overshadowed an upwardly revised U.S. second-quarter economic growth reading.

In the currency market, the dollar and euro softened against safehaven yen, though the greenback retraced much of its earlier decline on the surprise upward GDP revision.

The dollar was down 0.05 percent to 103.79 yen but flat against the Swiss franc at 0.9148 franc .

The euro fell 0.3 percent to 136.62 yen and declined 0.1 percent versus the Swiss franc to 1.2055 francs , close to a 21-month low. [FRX/]

Safe-haven demand pushed spot gold prices higher for a third day, rising 0.5 percent at 1,289.50 an ounce. [GOL/]

London oil prices held above their recent 14-month lows on short-term supply concerns. Brent crude for October delivery was last up 19 cents or 0.18 percent at $102.91 a barrel, while U.S. crude futures were up 72 cents or 0.77 percent, at $94.60 per barrel. [O/R]

(Additional reporting by Karen Brettell in New York; Marc Jones, Sujata Rao and Marius Zaharia in London; Editing by John Stonestreet and Meredith Mazzilli)

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