Ongoing tensions between Russia and Ukraine have slowed but not stopped the recovery in Europe, Franklin Templeton's Katrina Dudley said Tuesday.

"There is something that nobody in America realizes—the last two world wars started in Europe, and that is still very fresh in their mind," she told CNBC's "Halftime Report." "War is a much more closer-to-home feeling for Europeans."

Dudley, portfolio manager at the $3.1 billion Franklin Mutual European Fund, said that geopolitical risk in the area is having two primary effects: on consumer confidence and on a company level.

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While she has been "very bullish" on Europe, Dudley said that "recovery's been pushed out a little to the right."

"Fixed investment, which is what we need for that recovery, is now starting to recover," she said, noting that June inflows had seen a positive turn.

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Russian stocks had been "disproportionately punished," Dudley added. "From our perspective, that's a buying opportunity."

In the energy sector, Russian President Vladimir Putin recognizes the two-way relationship with Euorpe, she said.

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"Russia needs the hard currency that selling that gas into Europe provides, so they can't just cut off the supply of gas unilaterally," Dudley said. "And you haven't seen any reaction, for example, from Gazprom, which is a primary supplier of gas.

"So, I think that Russia knows that this is a partnership of necessity, that he needs Europe, Europe needs him. So, I don't think he's going to act irrationally, but I do think that he is going to try and use it as a negotiating tool."

—By CNBC's Bruno J. Navarro