* New Ukraine worries cause DAX to underperform
* FTSEurofirst 300 down 0.3 pct, erasing earlier gains
* Alstom surges on GE bid speculation
By Sudip Kar-Gupta
LONDON, April 24 (Reuters) - New signs of an escalation in tensions in Ukraine hit European stock markets on Thursday, with Germany’s DAX index underperforming the broader market pullback.
German and Austrian companies are among the most exposed in Europe to Russia and Ukraine, and the DAX fell 1.2 percent while Vienna’s benchmark ATX equity index declined by 0.9 percent.
Both indexes fell after Russian Defence Minister Sergei Shoigu was quoted by the Interfax news agency as saying that Russia had started military drills near the Ukrainian border on Thursday, in response to operations by Ukrainian forces against pro-Russian separatists and NATO exercises in eastern Europe.
The fall in the DAX weighed on the broader, pan-European FTSEurofirst 300 index, which was down by 0.3 percent at 1,335.01 points in late session trading.
The FTSEurofirst had earlier been pushed higher by signs of a resurgence in corporate takeover activity. Andreas Clenow, hedge fund trader and principal at ACIES Asset Management, said he saw the Ukraine situation as causing short-term pullbacks rather than a more prolonged setback.
“I see it causing more of a short-term scare rather than anything more long-term. When the market gets scared - I‘m a buyer,” said Clenow.
Andrew Arbuthnott, head of European large cap equity at Pioneer Investments, also said that merger and acquisition activity could enable European equities to rise further over the rest of the year.
Shares in Alstom rose 11.4 percent after Bloomberg News reported that General Electric was in talks to buy the struggling French turbine and train maker.
Le Figaro newspaper said GE was only interested in Alstom’s energy assets while Alstom itself said it had not been informed of any potential public tender offer.
Scania also jumped, by 8 percent, after its fourth-largest shareholder said it would accept Volkswagen’s takeover offer for the truck maker, improving prospects for the bid to go through despite strong opposition.
“The merger and acquisition activity we have been seeing is supportive and confirms our view that there is more value left in the European equity market,” said Arbuthnott.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today’s European research round-up (Editing by Susan Fenton)