* FTSEurofirst 300 index falls 0.5 percent
* Volatility Index up 6.6 pct, indicates risk aversion
* Royal Bank of Scotland falls after posting losses
LONDON, Feb 27 (Reuters) - European equities fell further to a one-week low in late trading on Thursday, with downbeat company news combined with political tension in Ukraine prompting investors to trim their positions in riskier assets.
Cyclical shares lost ground, with autos, insurance , telecoms and banks falling 0.2 to 1.1 percent. Royal Bank of Scotland slumped 8 percent after posting a loss, while insurer Allianz fell following difficulties at its Pimco unit.
Weaker companies dragged down the broader FTSEurofirst 300 index, which had rebounded in February to approach its highest level since May 2008. The pan-European index was down 0.5 percent to 1,342.06 points by 1522 GMT after falling as much as 1,334.74, the lowest level in one week.
Investors' risk aversion was highlighted by the Euro STOXX 50 Volatility index, Europe's widely used gauge of investor sentiment, which gained 6.6 percent.
"The markets had gone ahead of themselves and we may see investors taking some risk out of the table. Volatility has also come back to the fore," said Thomas Malloch, investment manager at Redmayne Bentley.
"Any weakness is likely to be well-bought, as a good amount of capital is waiting on the sidelines to get invested into the market, but you need to be careful as valuations of many companies look stretched at the moment."
Political tensions in Ukraine have added to pessimism about emerging markets which hit equities in January and has dragged on the earnings of companies - such as luxury goods groups - exposed to those regions.
On Thursday, armed men seized the regional government headquarters and parliament in Ukraine's Crimea peninsula, a day after Russian President Vladimir Putin ordered military drills in western Russia near the countries' border.
"We're getting to the tail-end of results season, and many of the results have not been that great. It's also early days in Ukraine, but the situation over there is making people nervous," said Andrea Williams, European equities fund manager at Royal London Asset Management.
Some individual stocks were hurt by disappointing company news. Britain's WPP fell 3.7 percent as fierce competition in the global advertising industry forced the company to lower its profit guidance for 2014, wiping more than a billion pounds off its share price.
Across Europe, Spain's IBEX index fell 1 percent, while Germany's DAX, which hit a record high of 9,794.05 points in late January, weakened by 1.1 percent to 9,525.04 points.
However, some investors said they were taking advantage of lower prices to accumulate more stocks.
JNF Capital investment manager Ed Smyth said he was buying into the DAX at current levels using synthetic exchange-traded funds (ETFs) as he felt the index would soon recover.
On the positive side, British outsourcing company Capita rose 6.8 percent after posting a 14 percent rise in annual profits and saying was confident about its prospects in 2014.