European stocks up on easing MH17 fears

A Malaysian expert (L) examines a black box belonging to Malaysia Airlines flight MH17 during its handover from pro-Russian separatists, in Donetsk July 22, 2014. The remains of some of the 298 victims of the Malaysia Airlines plane downed over Ukraine were making their way to the Netherlands on Tuesday as Senior Ukrainian separatist leader Aleksander Borodai handed over the plane's black boxes to Malaysian experts.

A Malaysian expert (L) examines a black box belonging to Malaysia Airlines flight MH17 during its handover from pro-Russian separatists, in Donetsk July 22, 2014. The remains of some of the 298 victims of the Malaysia Airlines plane downed over Ukraine were making their way to the Netherlands on Tuesday as Senior Ukrainian separatist leader Aleksander Borodai handed over the plane's black boxes to Malaysian experts.

Published Jul 22, 2014

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London - Europe's main stock markets rose Tuesday as investors welcomed news that pro-Russian rebels had handed over the black boxes from downed flight MH17, easing concerns over the disaster.

In midday deals, London's benchmark FTSE 100 added 0.77 percent to 6,779.67 points, Frankfurt's DAX 30 index advanced 0.84 percent to 9,692.89 points and the Paris CAC 40 gained 0.81 percent to 4,339.78.

Milan stocks rallied 1.26 percent and Madrid advanced 1.02 percent.

“European equities have picked up ... due to positive steps in the Ukraine,” said dealer Jonathan Sudaria at trading firm Capital Spreads.

The downing of the Malaysia Airlines jet last Thursday in Ukraine fanned fears that a regional crisis could become an international one, with Western governments saying it was shot down by pro-Russian separatists.

Those tensions eased somewhat on Tuesday after it emerged the rebels had given the plane's two black boxes to Malaysian officials.

They also announced a ceasefire in an area around the crash site to provide safe access for an international investigation.

And they allowed a train carrying the remains of 280 of the people killed in the disaster to leave the region.

EU foreign ministers are meeting in Brussels to tackle tougher sanctions against Russia, divided over how far to go and with Britain-led calls for an arms embargo putting France on the spot.

Fighting in Gaza, which has overhung markets in the last few days, continued however.

“Co-operative steps from the pro-Russian rebels have soothed traders' fears that East-West relations are about to resemble the cold war era; but attention and risk now moves to the eurozone foreign ministers meeting today,” added Sudaria.

In Paris, Saxo Banque analyst Christopher Dembik said: “The CAC 40 is rebounding quite sharply this morning in a market which is still highly speculative. After several sessions of falls, partly because of increasing geopolitical risks in eastern Europe, the upturn in the index should not be a surprise.”

He said: “Recent tension between Russia and Ukraine was the ideal opportunity for many investors to adjust their positions and take profits.”

Berenberg analyst Robert Wood, commenting on data showing strong orders for British manufacturing, said: “Rising geopolitical tensions, particularly surrounding Ukraine, are a big risk to our optimistic growth calls.”

He noted that “the proportion of firms reporting political and economic conditions as a constraint on export orders was the highest since April 2013. The latest escalation of events in Ukraine could knock manufacturers' confidence further in the next few months as the Putin effect spreads beyond Eastern Europe and Germany.”

Asian equities also pushed upwards on Tuesday, helped by an easing of concern over Ukraine.

Hong Kong rallied 1.69 percent to close at 23,782.11 - its highest level since December - and Shanghai rose 1.02 percent.

Tokyo closed up 0.84 percent, Seoul ended 0.52 percent higher and Sydney gained just 0.06 percent.

The improved sentiment filtered through to currency markets, with the yen easing as investors grow more confident in higher-risk assets.

The Japanese unit is considered a safe haven in times of uncertainty.

The dollar climbed on Tuesday to 101.51 yen compared with 101.38 yen late in New York on Monday.

The European single currency meanwhile fell to a February low at $1.3478, down from $1.3523 late in New York on Monday.

The British pound slipped to $1.7067 from $1.7075 on Monday.

The euro dipped to 78.99 pence from 79.19 pence.

In commodity deals, gold fell to $1,307.49 per ounce from $1,311.50 on Monday. - Sapa-AFP

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