European shares fall on Ukraine jitters; investors seek weekend protection

* FTSEurofirst 300 down 1.3 pct

* Stocks exposed to Russia under renewed pressure

* DAX puts rise; German index seen most vulnerable

By Alistair Smout

LONDON, March 7 (Reuters) - European shares fell on Friday, amid growing tension over Crimea, as investors tried to shield themselves from the impact of any confrontation between Russia and Ukraine on the weekend.

Above-forecast U.S. jobs data briefly helped shares pare their losses. But they turned sharply lower again on reports that a U.S. warship was entering the Black Sea.

The U.S. military said the planned exercise was routine. Even so, the reaction showed how sensitive the market is to news about Crimea.

"People are a little bit nervous to go into the weekend with fully loaded long positions, given the ongoing Ukraine crisis," said Zeg Choudhry, the head of trading at Northland Capital Partners (Other OTC: PGPHF - news) .

A deteriorating geopolitical situation last weekend saw stocks fall 2.3 percent on Monday. A 14.9 percent pick-up in volatility - a crude indicator of investor fear - indicated growing demand for protection, and thus a higher price to shield against future swings.

Diplomatic efforts to cool the crisis in Ukraine calmed markets over the past few days. Then tensions rose again, with U.S. President Barack Obama ordering visa bans and asset freezes for unidentified but presumably Russian people who were deemed responsible for threatening Ukraine's sovereignty.

Russian President Vladimir Putin rebuffed the warning by Obama on Friday, saying that Russia could not ignore calls for help from Russian speakers in Ukraine.

Germany's DAX index - considered the most vulnerable to tensions in Ukraine and Russia - fell 1.1 percent.

Investors have piled into the options market for protection against any future fall in the DAX, with Eurex data showing a rise in the ratio between "put" and "call" options. Puts are a bet on a fall in the DAX; calls a bet on a rise. The put/call ratio on DAX options due to mature in March jumped to 3.13 at the start of March from 1.47 in early February.

The FTSEurofirst 300 index of top European shares finished down 1.3 percent at 1,326.70 points, having extended losses into the close.

European blue chips exposed to Russia and Ukraine came under renewed pressure. Nokian Renkaat (Other OTC: NKRKY - news) fell 1.8 percent, Raiffeisen Bank International (Other OTC: RAIFF - news) 2.8 percent and Carlsberg (Other OTC: CABGY - news) 0.9 percent. The three companies get 26 percent, 22 percent and 17 percent respectively of their revenues from Russia, according to data from MSCI (NYSE: MSCI - news) .

Stocks briefly recovered after U.S. jobs data beat forecasts, which could ease fears of an abrupt slowdown in economic growth and support the Federal Reserve's decision to reduce its monetary stimulus.

Employers added 175,000 jobs to their payrolls last month, compared with a consensus prediction of 149,000 in a Reuters poll. Economists said poor weather in February could mean the underlying health of the economy was even stronger.

"The weather is playing havoc with the US data," Rob Wood, economist at Berenberg, said. "Today's figures are probably still distorted by the snow, meaning that the underlying position could be better than the headline suggests."

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