Stocks near one-month low as western sanctions on Russia loom

Mon Mar 17, 2014 5:33am EDT
 
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By Natsuko Waki

LONDON (Reuters) - World stocks traded near a one-month low on Monday and the dollar and German bonds held firm as investors worried about the economic impact of possible western sanctions on Moscow after Crimea voted to separate from Ukraine.

U.S. Treasury yields ticked higher from a 1-1/2 week low set last week. Friday's data showing a record drop in foreign governments' holdings of Treasuries underscored the appetite of emerging countries like Russia for cashing in their holdings to defend their currencies.

British Foreign Minister William Hague said he expects EU ministers to agree sanctions including travel bans and asset freezes against Russian and Crimean individuals following Sunday's referendum.

Investors are worried that sanctions, which are likely to hit Russia's already flagging economy, may also weigh on European companies that are exposed to Russia.

"The market to some extent expects sanctions now. It depends on what kind of sanctions and (Russia's) reaction to the sanctions to see if we can talk of a de-escalation of the crisis or not," said Piet Lammens, a KBC strategist in Brussels.

Alpari market analyst Craig Erlam said he expected "a long drawn out stand-off."

The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 countries, was largely steady on the day, trading near a one-month low hit on Friday.

German 10-year Bund yields, the benchmark for euro zone borrowing costs, were flat at 1.55 percent, not far from Friday's eight-month lows of 1.506 percent.   Continued...

 
A man is reflected in a stock quotation board outside a brokerage in Tokyo January 28, 2014. REUTERS/Toru Hanai