European shares dip as Ukraine crisis deepens

* FTSEurofirst 300 down 0.5 pct, Euro STOXX 50 down 0.7 pct

* DAX underperforms again on worries over Ukraine

* Deutsche Bank (Xetra: DBK.DE - news) hurt by report of capital hike

By Blaise Robinson and Sudip Kar-Gupta

PARIS/LONDON, April 25 (Reuters) - European shares fell in early trade on Friday as new signs of violence in Ukraine weighed on stock markets that had been buoyed by corporate takeover activity.

Germany's DAX index, seen as the European market most vulnerable to the crisis between Ukraine and Russia, was down 0.8 percent, at 9,471.31 points.

Ukrainian forces killed up to five pro-Moscow rebels on Thursday and Russia launched army drills near the border in response. Seven people were also injured overnight at a pro-Ukrainian checkpoint near Ukraine's Black Sea port of Odessa when an explosive device blew up.

"I'm a seller here. The DAX has got the legs to come off down to 9,250 points," said Darren Courtney-Cook, head of trading at Central Markets Investments Management.

The DAX, which has been outperforming European stock indexes for years, is down 1.2 percent so far this year, trailing behind France's CAC 40, up 3.7 percent in 2014, Milan's FTSE MIB up 14 percent and Madrid's IBEX up 4.7 percent.

Deutsche Bank featured among the biggest losers, down 2.4 percent, hurt by a report saying the lender is considering whether to raise as much as 5 billion euros ($6.91 billion) in capital this year to cope with European stress tests and new capital rules.

Bucking the trend, shares in Gucci's parent Kering (Milan: KER.MI - news) rose 2.4 percent, after the company said sales trend for the luxury brand were improving.

The pan-European FTSEurofirst 300 index, which hit a near 6-year high of 1,355.29 points earlier this month, fell 0.5 percent to 1,337.97 points in early session trading.

The euro zone's blue-chip Euro STOXX 50 index shed 0.7 percent, to 3,169.70 points.

"The selling pressure, sparked once again by the resurgence of violence in Ukraine, remains relatively weak," Gerard Sagnier, technical analyst at Aurel BGC, said. "At the same time, there are a lot of buyers for these dips, which keeps the market's longer-term trend alive."

European stock markets had risen on Thursday, boosted by signs of a resurgence in corporate takeover activity.

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

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

Today's European research round-up

(Editing by Alison Williams)