European stocks slump as West warns Russia over Ukraine

European stocks retreated Thursday as concerns over crisis-hit Ukraine trumped rosy US data, while the euro spiked to a 29-month peak against the dollar. Positive US unemployment and retail sales data had helped most European stocks climb into positive territory, but talk of Europe and the United States implementing tough sanctions against Russia sent indices sliding. London's FTSE 100 shed 1.01 percent to close at 6,553.78 points, while the DAX 30 in Frankfurt tumbled 1.86 percent to 9,017.79, and Paris's CAC 40 slumped 1.29 percent to 4,250.51 points. Milan gave up 0.91 percent and Madrid fell 1.19 percent. "There was a market inflection even if the American statistics were quite good," said Pierre Martin, an analyst at Saxo Banque. "With the geopolitical crisis and the concerns about Asia, in such a context the European markets are remaining cautious," he added. US stocks opened up on the data suggesting the US recovery is on track, but fell back. New claims for US unemployment benefits tumbled last week to 315,000, the lowest level in more than three months, while retail sales rose by 0.3 percent to $427.2 billion, the first gain after two months of declines. In midday trading the Dow Jones Industrial Average was down 0.90 percent to 16,193.08 points. The broad-based S&P 500 slid 0.71 percent to 1,854.87, while the tech-rich Nasdaq Composite Index shed 1.10 percent to 4,275.92. US Secretary of State John Kerry warned Russia Thursday that Washington and Europe were preparing a tough response to a breakaway vote in Ukraine's Crimea this weekend, depending on how Moscow reacts. The European Parliament also called for tough new sanctions against Russia, which has taken de-facto control of Crimea and simplified measures to incorporate the strategic Black Sea peninsula. Asian equities were mostly higher on Thursday but sentiment took a hit after China released another batch of disappointing data, adding to fears about growth in the economic giant. Concerns over Ukraine, as well as China's economic slowdown, also sent traders fleeing to gold, a traditional haven investment. Gold leapt to a six-month peak at $1,375.21 an ounce on the London Bullion Market. It ended the day at $1,368.75, up from $1.366 late on Wednesday. "It is not just the Chinese concerns that are driving gold prices higher. The situation in Ukraine ... is getting worse," noted Forex.com analyst Fawad Razaqzada. Ukraine moved on Thursday to mobilise a volunteer force to ward off Russia's expansionist threat as Berlin warned Moscow of long-term damage to its economy and EU relations over the Crimea crisis. The Verkhovna Rada parliament unanimously backed the creation of a new force of up to 60,000 volunteers who could keep Russian troops from advancing beyond the Crimean peninsula which they seized at the start of the month. - Euro pressures dollar - Meanwhile in foreign exchange deals, the European single currency jumped to $1.3967 -- the highest level since late October 2011. The euro has charged higher after the European Central Bank (ECB) last week played down deflationary risks in the eurozone last week, dampening prospects of easier monetary policy, dealers said. "The market is still chewing over the ECB’s playing down of current deflationary threats to the zone, but this is largely just a continuation of the trend in place since early February," said CMC Markets analyst Toby Morris. The unit later pulled back to $1.3916, but still up from $1.3904 late in New York on Wednesday. Back in Asia, Shanghai stocks jumped 1.07 percent, with analysts suggesting Chinese policymakers should start looking at moves to boost economic growth. Elsewhere, Sydney rose 0.53 percent and Seoul added 0.10 percent, while Tokyo fell 0.10 percent and Hong Kong was down 0.67 percent. China said on Thursday that industrial output rose 8.6 percent year on year in January and February, the slowest rate since April 2009. At the same time retail sales, a key indicator of consumer spending, were up 11.8 percent, which was also the worst performance for several years. The news added to speculation the Chinese economy -- a crucial driver of regional and global growth -- is slowing and comes days after officials announced a surprise trade deficit in February.