Shares, dollar struggle on Ukraine anxiety

Fri Apr 25, 2014 4:29am EDT
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By Marc Jones

LONDON (Reuters) - Heightened tension in Ukraine pushed world shares lower and lifted safe-haven European bonds on Friday, taking the shine off what looked set to be an earnings and M&A-driven week of gains for European and U.S. stocks.

Trouble in Ukraine escalated after Ukrainian forces killed up to five pro-Russia separatists on Thursday and Russia conducted military drills near the border, raising fears it was gearing up to invade.

European shares tumbled 0.5 percent in early trading as concerns also rose that the United States and Europe were readying increasingly tough sanctions on Russia which were bound to be met with retaliatory measures from Moscow.

The DAX in Germany, which has the region's biggest trade ties with Russia, were down almost 1 percent in early deals as the country's government bonds, favored by risk-wary investors, made ground.

Among the region's other main indexes the FTSE and CAC40 in London and Paris dropped 0.3 and 0.4 percent.

Shares in Moscow were staring at a weekly loss of almost 6 percent as they, and the ruble, took another bashing after Russia was also downgraded by Standard's & Poor.

"The escalation of tension in Ukraine is likely to keep markets risk-off," said Kyosuke Suzuki, director of forex at Societe Generale.

Asian stocks had also stumbled earlier after Wall Street had also struggled to shake off the geopolitical uncertainty despite some upbeat earnings.   Continued...

The curve of the German share price index DAX board is pictured at the Frankfurt stock exchange April 25, 2014. REUTERS/Remote/Stringer