Wall St dips on Ukraine concerns; data curbs decline

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks fell moderately on Thursday after the latest flare of tensions between Ukraine and Russian forces, snapping investors' focus back on the volatile region, though losses were tempered by the latest batch of U.S. economic data.

Worries over tension abroad had largely faded from Wall Street, with major indexes seeing few negative days over the past two weeks and both the Dow and S&P hitting records.

Ukraine's security and defense council said the border town of Novoazovsk and other parts of Ukraine's south-east had fallen under the control of Russian forces who, together with rebels, were staging a counter-offensive. NATO said well over 1,000 Russian troops were operating inside Ukraine.

While few U.S. companies have heavy exposure to either country, investors are worried about the potential fallout from any escalation in hostility, including increased sanctions.

"The data did cheer things up but the stuff that is happening in the Ukraine is worrisome and I'm glad to at least see a little bit of red out there today because of that," said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.

An index of major shares in Europe, which has more exposure to the region, closed down 0.6 percent. If European Reconomic growth is depressed by the conflict, that could have an indirect impact on the United States. Russia's dollar-denominated RTS index slumped 3.3 percent while the Market Vectors Russia Exchange-Traded Fund fell 2.8 percent to $24.37.

The Dow Jones industrial average fell 28.59 points or 0.17 percent, to 17,093.42, the S&P 500 lost 1.75 points or 0.09 percent, to 1,998.37 and the Nasdaq Composite dropped 7.71 points or 0.17 percent, to 4,561.91.

The benchmark S&P index has risen for 11 of the past 14 sessions, and has closed above 2,000 for the past two days. However, recent daily moves have been slight and trading volume has been among the lightest of the year.

A trio of economic reports pointed to improving conditions. The U.S. economy rebounded more strongly than initially thought in the second quarter, while jobless claims fell for a second straight week.

In addition, July pending home sales rose far more than had been expected to an 11-month high. The PHLX housing index lost 0.4 percent, but was off earlier lows.

"GDP is in the right direction and who knows where it is going to go the next revision, but it wasn't that big of a revision to say it was an anomaly," said Forrest.

The Federal Bureau of Investigation said it was investigating media reports that several U.S. financial firms have been victims of recent cyber attacks. JPMorgan Chase & Co said it was investigating a possible attack; shares fell 0.6 percent to $59.21. The S&P financial index lost 0.3 percent.

Abercrombie & Fitch Co lost 3.8 percent to $42.33 after the retailer's second-quarter same-store sales fell more than expected. Williams-Sonoma Inc tumbled 11.1 percent to $66.57 a day after reporting its results and giving an outlook.

(Editing by Chizu Nomiyama and Meredith Mazzilli)