Russia foray into Ukraine sinks global stocks

05 March 2014

AFP, New York :

Global stocks slumped and gold and oil prices soared Monday as Russia's sending of troops to Ukraine's Crimea sparked a backlash and threats of reprisal from leading Western powers.
The rise in tensions over Ukraine fed worries on everything from economic sanctions against Moscow to a possible cutoff of energy supplies flowing from Russia to Europe, to a clash of forces in Ukraine.
The turmoil, escalating since pro-Russian president Viktor Yanukovych was deposed and fled on February 22, sent investors seeking safe havens in top- quality bonds and currencies, a plus for the US dollar but also for gold.
European markets took the hardest hit, the region-wide Euro Stoxx 50 losing 3.0 percent and London's FTSE 100 dropping 1.5 percent.
Frankfurt's DAX 30 tumbled 3.4 percent while Paris's CAC 40 shed 2.7 percent. On Wall Street, the Dow Jones Industrial Average lost 0.9 percent and the broader S&P 500 0.7 percent. And earlier in Asia Hong Kong's Hang Seng index gave up 1.5 percent and the Nikkei in Tokyo 1.3 percent. "Rising tensions between Russia and the West has set investors on a war footing ... with stocks being hammered," said Mike McCudden, head of derivatives at online broker Interactive Investor.
Oil prices rose to their highest levels this year on fears that the Ukraine crisis has potential to lead to energy market disruptions.
In New York West Texas Intermediate crude for April delivery, surged 2.3 percent to $104.92 a barrel, while in London Brent North Sea shot up 2.0 percent to $111.20.
Carl Larry of Oil Outlooks and Opinion noted that more than 70 percent of Russia's gas and oil exports to Europe pass through Ukraine.
"Ukraine is a gateway for natural gas to Europe and that's a fine line to be skipping rope on," he said.
"The world can't afford to lose the 4.8 mbd of crude exports that Russia sends out. Nor can it afford to lose the 198 billion cubic meters of natural gas that feeds Europe and Asia."
Investors also fled to gold, with the Comex price gaining 2.2 percent to $1,350.30 an ounce.
In major currencies, the euro slipped to $1.3733 from $1.3800 late Friday. The euro also edged lower to 139,27 yen from 140.44 yen, while the dollar was at 101.42 yen, down from 101.76.
The British pound meanwhile fell to $1.6663 from $1.6737.

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