* London market closed for public holiday
* Euro STOXX 50 falls 0.4 pct
* Weak China data and Ukraine tensions weigh on equities
* UBS equity strategists cut China rating to "neutral"
* M&A could boost markets in May - Clairinvest fund manager
By Sudip Kar-Gupta and Blaise Robinson
LONDON, May 5 (Reuters) - European shares fell on Monday, as weak Chinese manufacturing data and concerns about new signs of conflict in Ukraine weighed on the region's stock markets.
The euro zone's blue-chip Euro STOXX 50 index was down by 0.4 percent at 3,166.51 points in early session trading.
Germany's DAX, which hit a record high of 9,794.05 points in late January, slipped 0.2 percent to 9,537.35 points while France's CAC also retreated 0.2 percent to 4,448.33 points.
Trading volumes were thin as the UK stock market was closed for a public holiday.
The final reading of China's HSBC/Markit purchasing managers index (PMI) for April came in at 48.1, lower than a preliminary reading of 48.3. Output and new orders contracted in April, and new export orders slipped back into contraction.
UBS' equity strategists cut their rating on China to "neutral", with the Swiss bank adding in a research note that there was a risk that Chinese economic growth could slow down to around 5 percent next year from just over 7 percent at present.
Tensions in Ukraine were also at the forefront of investors' minds, after pro-Russian militants stormed a Ukrainian police station in Odessa on Sunday and freed nearly 70 fellow activists.
"The escalation in Ukraine is spooking investors again, and people are quick to pull the trigger to book recent profits," said David Thebault, head of quantitative sales trading at Paris-based firm Global Equities.
The Euro STOXX 50 index remains up by around 2 percent since the start of 2014. Germany's DAX is down by 0.2 percent but France's CAC has risen by nearly 4 percent, helped by signs of corporate takeover activity such as bid interest for French manufacturing group Alstom.
Clairinvest fund manager Ion-Marc Valahu said he still had "long" positions to bet on gains in the Euro STOXX and CAC since he expected the recent resurgence of merger and acquisition activity to help those markets.
"I think there's a bit more value on the CAC due to the M&A, and I think we could reach 3,250 points on the Euro STOXX by the end of May," he said.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up (Editing by Hugh Lawson)