LONDON: European stock markets sank yesterday as claims of Russian troops actively fighting in east Ukraine raised fears of an outright military confrontation between Kiev and its former Soviet master.
In London the benchmark FTSE 100 index dropped 0.36 percent to 6,805.80 points and the Paris CAC 40 lost 0.66 percent to 4,366.04 compared with Wednesday’s close.
Frankfurt’s DAX 30 index shed 1.12 percent to 9,462.56 points, hit also as data showed German unemployment rose by 2,000 in August, dashing expectations for a decline of about 5,000.
“The stand-off between Russia and Ukraine has flared up once again with reports coming out of Kiev suggesting fresh military incursions across the border,” said analyst Tony Cross at trading firm Trustnet Direct. The Russian rouble sank to a five-month low of 36.75 against the dollar, and Russian financial stocks plunged on fears of the West unleashing new sanctions.
Gold rises
The price of gold — widely considered a safe-haven investment — rose on the London Bullion market to $1,292.0 an ounce compared with $1,282.52 an ounce on Wednesday.
Meanwhile, Germany’s federal statistics office Destatis said inflation in August stood just 0.8 percent year-on-year, unchanged from July. The preliminary flash estimate came after France announced unemployment rate had hit a record high last month.
Analysts said the statistics from the eurozone’s two largest economies had also weighed on investors’ minds. “Things seem to be going from bad to worse for the eurozone and as it stands, we’re seeing no signs that this is going to change,” said Craig Erlam, market analyst at brokers Alpari.
European stock markets had traded mixed on Wednesday, as investors paused after recent gains won on hopes of quantitative easing stimulus measures from the European Central bank.
Euro falls
In foreign exchange activity yesterday, the European single currency fell to $1.3181 from $1.3195 late in New York on Wednesday. The euro eased to 79.51 pence from 79.59 pence late in New York on Wednesday, while the pound rose to $1.6578 from $1.6576.
“The euro gave up all of this morning’s gains as investors pulled out of the currency for fears of further intervention and sanctions against Russia,” said Kash Kamal, analyst at Sucden Research.
Asia’s markets mostly fell yesterday, with investors unable to build on recent advances on the eve of key US second-quarter economic growth data. Tokyo fell 0.48 percent, Sydney lost 0.47 percent, Shanghai gave up 0.62 percent and Hong Kong lost 0.71 percent, while Seoul finished on a flat note.
Global markets are however on a general uptrend as the US economy shows regular signs of getting back on track, in turn sending New York stocks to record highs.
Yesterday, US stocks opened sharply lower as Ukraine crisis worries surged, offsetting upbeat encouraging US economic growth and unemployment data.
By early-afternoon on Wall Street, Dow Jones Industrial Average had slid 0.21 percent to 17,086.26, while the tech-rich Nasdaq Composite dropped 0.14 percent to 4,563.23. The broad-market S&P 500 pulled back from Wednesday’s record close, shedding 0.11 percent at 1,997.98.
AFP
