PARIS, March 3 (Reuters) - European stocks were set to drop on Monday as escalating tensions in Ukraine and China's soft manufacturing data prompt investors to move to the sidelines in the first session of the month. At 0725 GMT, futures for the Euro STOXX 50, for the UK's FTSE 100 , for Germany's DAX and for France's CAC were down 1.0-1.4 percent. Ukraine mobilised for war on Sunday after Russian President Vladimir Putin declared he had the right to invade his neighbour, sending Asian stocks tumbling and oil prices jumping. "The situation in Ukraine is evolving seemingly by the hour and is at critical juncture," IG chief market strategist Chris Weston wrote in a note. "Ultimately the market wants to know to what extent the West will impose economic sanctions on Russia if there is bloodshed and further deterioration." The rise in risk aversion worldwide sent Japan's Nikkei average dropping 1.3 percent while the yen rose. Russian stocks were also hammered, with state gas monopoly Gazprom losing 12 percent and lenders Sberbank and VTB down by more than 10 percent. The rouble-denominated MICEX index of Russian shares was down 9.5 percent, while Russia's central bank hiked its key lending rate by 1.5 percentage points on Monday after the rouble hit an all-time low. Investors were also rattled by data showing China's factory activity shrinking again in February as output and new orders fell, fuelling concerns of a slowdown in the world's second biggest economy. "We're in for a risk-off day: watch volatility indexes jumping, people booking profits and moving out or buying gold, while short sellers move in," a Paris-based equity and exchange-traded fund (ETFs) trader said. Europe bourses in 2014:Asset performance in 2014:------------------------------------------------------------------------------ MARKET SNAPSHOT AT 0728 GMT: LAST PCT CHG NET CHG S&P 500 1,859.45 0.28 % 5.16 NIKKEI 14,652.23 -1.27 % -188.84 MSCI ASIA EX-JP 458.92 -0.85 -3.92 EUR/USD 1.3783 -0.14 % -0.0019 USD/JPY 101.33 -0.46 % -0.4700 10-YR US TSY YLD 2.607 -- -0.05 10-YR BUND YLD 1.580 -- -0.05 SPOT GOLD $1,347.50 1.64 % $21.71 US CRUDE $104.24 1.61 % 1.65 > GLOBAL MARKETS-Stocks sink on Ukraine war threats > U.S. equity futures slip, concerns about Ukraine cited > Nikkei falls to 1-1/2-week low on Ukraine tensions; oil sector up > FOREX-Yen gains broadly after tensions heighten in Ukraine > PRECIOUS-Gold jumps more than 1 pct on crisis in Ukraine > London copper sinks to three month lows, China worries resurface > Oil jumps over $2 as Ukraine mobilises for war, WTI at 5-mth top COMPANY NEWS: ROCHE Roche said a committee recommended it halt studies of a development drug, onartuzumab, combined with Tarceva in non-small cell lung cancer because the treatment wasn't shown to work in late-stage studies. BANKIA Billionaire financier George Soros bought shares in Bankia last week when the Spanish state sold a 7.5 percent stake, beginning the process of returning the country's biggest bailed-out lender to private ownership, El Confidencial reported on Sunday. BANCO POPOLARE The shareholders of the Italian cooperative lender on Saturday gave final approval to a 1.5 billion euro ($2.1 billion) capital increase to be launched on March 31. FRESENIUS, RHOEN-KLINIKUM The hospital division of the diversified German healthcare group Fresenius plans to cut a small number of jobs after purchasing around 38 hospitals from Rhoen-Klinikum for 3.07 billion euros, the division chief was quoted as saying on Saturday. Separately, the company said on Sunday it had no plans to close any of the 110 hospitals it operates, including the 38 recently purchased from Rhoen-Klinikum. MERCK KGaA AZ ELECTRONIC MATERIALS The German liquid crystal maker has extended the offer period for its planned takeover of Britain's AZ Electronic Materials for a fourth time as it awaits approval for the deal from Chinese antitrust regulators. SIEMENS Siemens has been awarded a $253 million contract by the Qatar General Electricity and Water Corporation (KAHRAMAA) to build nine substations, the German technology giant said on Sunday. BANCA POPOLARE DI SONDRIO The small lender plans to launch a capital increase worth up to 350 million euros ($483 million) by the end of the year. THYSSENKRUPP The steelmaker's annual energy costs would rise by 265 million euros ($366 million) if it lost an exemption from surcharges meant to help fund Germany's shift to greener energy, Rheinische Post quoted Chief Executive Heinrich Hiesinger as saying. BANCA MONTE DEI PASCHI DI SIENA The lender's top shareholder plans to ask for 750 million euros to its former executives and to the bank's advisers as a compensation for the losses it booked on the bank's shares, daily La Stampa reported on Sunday. TELECOM ITALIA The phone company has reached its 2013 targets on profitability and debt, the phone company's Chief Executive Marco Patuano told daily Corriere della Sera on Saturday. Patuano added he expected the speculative shareholders to decrease in favour of "stable shareholders" investing in the company with a long-term horizon. NOVARTIS, ROCHE Swiss pharma group Novartis will work more closely with rival Roche but rules out a merger, its chairman said in a newspaper interview on Sunday. IMERYS Minerals Technologies is preparing to trump an offer made by Imerys to buy U.S. minerals and materials group Amcol International for $42.75 a share, the Financial Times said on Monday. Minerals Technologies could make public its bid as early as Monday, the paper said, citing people familiar with the process. SOLVAY Chemical producer Solvay has hired Credit Suisse Group to find a buyer for its sulfuric acid unit and approached private equity firms about a deal that could reach $800 million, according to three people familiar with the matter.