Stocks slip on Wall Street gloom, Ukraine tensions

TOKYO (Reuters) - Asian share markets gave up more ground on Monday after a dismal week on Wall Street and tensions in Ukraine sapped investors' appetite for risk, which helped underpin the safe-haven yen.

Ukraine gave pro-Russian separatists a Monday morning deadline to disarm or face a "full-scale anti-terrorist operation" by its armed forces, raising the risk of a military confrontation with Moscow.

European Union foreign ministers will hold talks later on Monday about tougher sanctions against Russia.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 0.4 per cent, pulling further away from five-month highs hit on Thursday.

Japan's Nikkei stock average briefly turned positive, but was down about 0.1 per cent after hitting its lowest level since early October. The Nikkei tumbled 7.3 per cent last week, its biggest weekly fall since the devastating earthquake and tsunami in March 2011.

Investors were wary that Wall Street's rout might continue. "Some are worried that a United States bubble in equities markets might be corrected, because of the ongoing tapering" of monetary stimulus by the US Federal Reserve, said Kyoya Okazawa, head of global equities at BNP Paribas in Tokyo.

S&P 500 e-mini futures were down about 0.2 per cent on Monday, after US stocks slid in a volatile session on Friday. The Nasdaq closed below the 4,000 mark for the first time since early February as investors bailed out of high-flying technology and biotech shares.

The low-yielding yen benefited from the heightened risk aversion. The dollar was down about 0.1 per cent at 101.55 yen , after touching a 3-1/2-week low of 101.32 yen on Friday, a far cry from a 2-1/2-month high of 104.13 yen set on April 4.

"Wall Street's performance will remain a key driver for the dollar and yen. Near-term focus is on 101.20 yen. It appears significant bids for the dollar are lined up there, and a break below that level is likely to trigger significant covering of yen shorts," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.