German shares lag in Europe as Ukraine conflict hits ZEW

* Germany's DAX down 0.2 pct, FTSEurofirst 300 up 0.2 pct

* ZEW index, Henkel (Xetra: 604840 - news) 's guidance show Germany hit by Ukraine

crisis

* Pandora (Other OTC: PNDZF - news) rallies after results

By Francesco Canepa

LONDON, Aug 12 (Reuters) - German shares lagged mostly flat

European stocks on Tuesday as a key survey provided more

evidence the region's largest economy was being hurt by the

conflict in Ukraine.

Frankfurt's DAX index fell 0.2 percent, the biggest

decline among major regional indexes, after the ZEW survey

showed German analyst and investor morale fell to its lowest in

more than a year in August.

The survey reflected the turmoil in Ukraine and concern that

sanctions and counter-sanctions between Russia and the West may

affect Europe's industrial powerhouse. German companies exposed

to Russia range from Adidas (Other OTC: ADDDF - news) , the world's

second-largest sportswear firm, to airport operator Fraport

and defence firm Rheinmetall (Xetra: 703000 - news) .

German consumer-goods group Henkel warned on

Tuesday that earnings growth would slow in the second half of

the year, partly because of the friction between Russia and

Ukraine. Henkel shares fell 5.7 percent.

A convoy of 280 trucks Russia said was carrying humanitarian

aid for Ukraine set off late from near Moscow on Tuesday amid

Western warnings against using help as cover for an invasion.

Ukraine also reported that Russia has massed 45,000 troops on

its border.

"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 Christian Schulz, an economist at

Berenberg.

"That does not change the fundamentally positive outlook,

however. Germany remains in a strong position to capitalise on

any sentiment improvements once the Ukraine crisis fades from

the headlines, and many euro zone countries are enjoying the

benefits of their reforms."

At 1008 GMT, the FTSEurofirst 300 index of top

European shares was up 0.2 percent at 1,325.92, after rising 1.3

percent on Monday. The euro zone's blue-chip Euro STOXX 50

index was flat at 3,047.50 points.

The indexes are down 6 percent and 8 percent respectively

from their July peaks, hit by worries about conflicts from

Ukraine to the Middle East, the prospect of a tighter U.S.

monetary policy and softer European economic data.

"We've already seen the underperformance, so if there is no

new (negative) development and the economy starts doing not so

badly we may have sen the trough for this correction," said

Joost Van Leenders, an investment specialist for allocation and

strategy at BNP Paribas Investment Partners.

Danish jewellery maker and retailer Pandora

helped to support European indexes on Tuesday. The shares surged

8.5 percent after it posted better-than-expected second-quarter

results, leading it to raise its 2014 revenue forecast.

As Europe's earnings season draws to a close, STOXX Europe

600 companies have posted a 9.7 percent rise in

second-quarter profits on average. But revenues have slipped 1.1

percent, reflecting Europe's frustratingly slow economic

recovery.

Europe bourses in 2014: http://link.reuters.com/pap87v

Asset performance in 2014: http://link.reuters.com/gap87v

Today's European research round-up

(Additional reporting by Blaise Robinson in Paris; Editing by

Larry King)