London - Crisis in Ukraine, weak trading updates from European companies and worries over China’s economy turned investors sour on riskier assets yesterday, driving shares lower and bond prices higher.
German think-tank ZEW said analyst and investor sentiment fell for a fourth month in a row this month, with one economist blaming “gusts from the East”.
Russia said Ukraine, whose Crimea region it annexed last month, was on the brink of a civil war.
Kiev said an “anti-terrorist” operation against Russian separatists was under way, though any crackdown appeared to be off to a slow start.
US officials have said they were in talks with European partners on how to punish Moscow for what Kiev and its Western allies call a Russian plot to annex Ukraine.
“Things have not improved in Ukraine, and this is weighing on the markets,” said Francois Savary, the chief investment officer at Swiss bank Reyl.
The FTSE Eurofirst 300 index was down 0.3 percent at 1 315 points, with SABMiller, L’Oreal and Nestlé producing weak sales reports.
US stock futures edged up, suggesting a tentative rise on Wall Street later in the day.
However, the focus in Asia was on data showing China’s money supply grew at the weakest pace in more than a decade last month, in another sign of softening momentum in the second-largest economy.
China’s benchmark Shanghai composite index slid 1.4 percent, its biggest fall in almost a month, while the MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.3 percent.
Japan’s Nikkei rose 0.8 percent, as bargain-hunters stepped in after the index hit a six-month low on Monday.
Data showing annual inflation in Britain dipped to 1.6 percent nudged sterling higher after some had speculated a faster fall could have pushed back expectations of when the Bank of England would raise rates.
Sterling reversed earlier losses after the data to trade all but flat on the day.
Forecast-beating US retail sales numbers on Monday supported the dollar, which gained 0.15 percent against a basket of currencies.
The euro was under pressure, at a six-day low to the dollar, on weekend comments from European Central Bank president Mario Draghi, who said exchange rate strength could trigger further policy easing.
Euro zone government bond yields fell, with those on Italian 10-year debt hitting a record low around 3.125 percent.
Gold fell from a three-week high, while Brent crude futures dropped after a surge to a six-week high. – Reuters