Ukraine worries intensify flight to safety

Fri Mar 14, 2014 9:16am EDT
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By Marc Jones

LONDON (Reuters) - Heightened tensions between the West and Russia ahead of Ukraine's weekend referendum in Crimea pushed world stocks to their lowest in more than a month on Friday and left investors scurrying into safe-haven gold and bonds.

With the West ramping up talks of sanctions and Russia hitting back with promises of retaliatory measures and displays of military prowess, financial markets were left to watch nervously.

Wall Street was set to add to this week's losses, while a third straight day of declines on European stock markets

.FTEU3 left them down almost one percent and potentially facing their biggest weekly drop since June when the Federal Reserve hinted it would taper economic stimulus.

Hardest hit was Moscow's MICEX .MCX index. It fell more than 5 percent before clawing back some of its losses to be down 2.5 percent. There was no let up for the ruble either as it rumbled along at an all-time low.

"The Ukraine is one of the most serious geopolitical situations at the moment and how it plays out is difficult to forecast," Salman Ahmed, a global fixed-income strategist at the investment arm of Swiss private bank Lombard Odier, said.

"The main risk factor is that it morphs into an unintended clash and there is bloodshed."

Part of the concern over the Crimea referendum on Sunday is that is could encourage other pro-Moscow parts of the country to follow suit and potentially embolden Russia in the region.   Continued...

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange February 5, 2014. REUTERS/Remote/Stringer