Economy

Ukraine crisis prompts jitters in European markets

LONDON (AP) — An escalation in tensions in the Ukrainian region of Crimea rocked European markets Thursday before a calm open on Wall Street helped ease the nerves.

Investors became concerned that the crisis in Ukraine was taking a more dangerous turn following reports that pro-Russia gunmen seized control of local government buildings in Crimea. Russia, meanwhile, scrambled fighter jets to patrol its border and reportedly gave shelter to Ukraine's fugitive president.

Over the past couple of weeks, investors had monitored developments in Ukraine with a degree of nonchalance. Now they are worrying that Russia may be drawn in. Geopolitical concerns tend to prompt investors to search out the sanctuary of safe haven assets such as gold and the dollar in place of stocks.

"Uncertainty in Ukraine has put traders on high alert," said David Madden, market analyst at IG. That was particularly evident in Ukraine and Russia. The Ukrainian currency, the hryvnia, was down 10 percent at 11 per U.S. dollar, having earlier touched a record low of 11.25. In Russia, the RTS stock index was down 2 percent.

Elsewhere in Europe, Germany's DAX closed down 0.8 percent at 9,588.33 while the CAC-40 in France ended flat at 4,396.39. The FTSE 100 index of leading British shares managed to eke out a gain, closing 0.2 percent higher at 6,810.27.

Europe's main indexes had been trading far lower earlier in the session before a solid start on Wall Street in the wake of upbeat earnings from the likes of J.C. Penney and Best Buy contained the selling. The Dow Jones industrial average was up 0.3 percent at 16,247 while the S&P 500 index rose 0.2 percent to 1,850.

Market confidence improved after Federal Reserve chair Janet Yellen suggested U.S. interest rates will remain low well after the unemployment rate falls below 6.5 percent and that the central bank is not on a preset course in withdrawing its stimulus.

"With Russian/Ukraine tensions still bubbling and concerns mounting about the Chinese credit markets and economic outlook, investors are likely to remain on edge," said Kathleen Brooks, research director at Forex.com.

Worries about the situation in Ukraine kept gold supported through the day and it an ounce of the metal was trading 0.4 percent higher at $1,333.30. Elsewhere, the euro recovered to trade 0.2 percent higher at $1.3717.

Earlier in Asia, shares were mixed with most of the news reports over Crimea coming after the close. Hong Kong's Hang Seng gained 1.7 percent to 22,828.18 and Seoul's Kospi added 0.4 percent to 1,978.43. Markets in Southeast Asia were also mostly higher and China's Shanghai Composite added 0.3 percent to 2,047.35. Japan's Nikkei 225 stock index edged 0.3 percent lower to 14,923.11.

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