German shares underperform in Europe as Ukraine conflict hurts economy

* Germany's DAX down 1.1 pct, FTSEurofirst 300 down 0.2 pct

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

crisis

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

By Francesco Canepa

LONDON, Aug 12 (Reuters) - German shares lagged European

peers on Tuesday as weak sentiment data and a gloomy outlook

from consumer goods group Henkel provided more evidence the

region's largest economy is being hurt by the conflict in

Ukraine.

Frankfurt's DAX index fell 1.1 percent, the biggest

decline among major regional bourses, 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) .

Henkel warned that earnings growth would slow in

the second half of the year, partly because of the friction

between Russia and Ukraine. Its shares fell 5

percent.

A Russian convoy carrying food, water and other aid set off

on Tuesday for eastern Ukraine, where government forces are

closing in on pro-Russian rebels, but Kiev said it would not

allow the vehicles to cross onto its territory.

At 1455 GMT, the FTSEurofirst 300 index of top

European shares was down 0.2 percent at 1,320.51 points, after

hovering around the gain line for most of the day.

"Now (NYSE: DNOW - news) you have the Ukrainians not letting the aid convoy in

and that shows (the situation) is very far from being solved,"

Markus Huber, a senior sales trader at Peregrine & Black, said.

"It seems that the market hasn't made its mind up at the

moment and I haven't seen a clear signal yet that we're turning

around."

The FTSEurofirst is down 6 percent from its July peak, hit

by worries about conflicts from Ukraine to the Middle East, the

prospect of 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 seen 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 was

a sharp outperformer, rising 8.3 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

Mark Trevelyan)