European stocks stable, with focus on Ukraine

March 13, 2014
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London's FTSE 100 fell 0.18 percent to 6,608.85 points/AFP
London’s FTSE 100 fell 0.18 percent to 6,608.85 points/AFP

, LONDON, March 13 – European stocks steadied on Thursday as investors eyed the latest news in crisis-hit Ukraine, while the euro spiked to a 29 month peak against the dollar, dealers said.

In late morning deals, London’s FTSE 100 fell 0.18 percent to 6,608.85 points.

In Frankfurt, the DAX 30 rose by 0.12 percent to 9,200.43 points and in Paris the CAC 40 was down 0.01 percent at 4,305.66 compared with Wednesday’s closing values.

“European indices are little changed with traders tending to stay on the side-lines for now closely watching events unfolding in the Ukraine,” said analyst Markus Huber at brokerage Peregrine & Black.

Asian equities were mostly higher on Thursday but sentiment took a hit after China released another batch of disappointing data, adding to fears about growth in the economic giant.

Concerns over Ukraine, as well as China’s economic slowdown, also sent traders fleeing to traditional haven investment gold.

Gold leapt to a six-month peak at $1,375.21 an ounce on the London Bullion Market, up from $1.366 late on Wednesday.

“It is not just the Chinese concerns that are driving gold prices higher. The situation in Ukraine is getting worse,” noted Forex.com analyst Fawad Razaqzada.

Ukraine moved on Thursday to mobilise a volunteer force to ward off Russia’s expansionist threat as Berlin warned Moscow of long-term damage to its economy and EU relations over the Crimea crisis.

The Verkhovna Rada parliament unanimously backed the creation of a new force of up to 60,000 volunteers who could keep Russian troops from advancing beyond the Crimean peninsula which they seized at the start of the month.

 

– Euro pressures dollar –

 

Meanwhile in foreign exchange deals, the European single currency jumped to $1.3967 the highest level since late October 2011.

The euro has charged higher after the European Central Bank (ECB) last week played down deflationary risks in the eurozone last week, dampening prospects of easier monetary policy, dealers said.

“The market is still chewing over the ECB’s playing down of current deflationary threats to the zone, but this is largely just a continuation of the trend in place since early February,” said CMC Markets analyst Toby Morris.

The unit later pulled back to $1.3957, but still up from $1.3904 late in New York on Wednesday.

Back in Asia, Shanghai stocks jumped 1.07 percent, with analysts suggesting Chinese policymakers should start looking at moves to boost economic growth.

Elsewhere, Sydney rose 0.53 percent and Seoul added 0.10 percent, while Tokyo fell 0.10 percent and Hong Kong was down 0.67 percent.

China said on Thursday that industrial output rose 8.6 percent year on year in January and February, the slowest rate since April 2009.

At the same time retail sales, a key indicator of consumer spending, were up 11.8 percent, which was also the worst performance for several years.

However, the news added to speculation the Chinese economy a crucial driver of regional and global growth is slowing and comes days after officials announced a surprise trade deficit in February.

“There has been more bad news out of China,” added Huber.

“However the impact on European markets so far has been minor as markets have already come off substantially over the last few days anyway and bad news out of China has become a bit of the norm in the recent weeks.”

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