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While you were sleeping: Ukraine concern heightens

While you were sleeping: Ukraine concern heightens

March 4 (BusinessDesk) – Stocks on both sides of the Atlantic slumped amid increased concern about the growing crisis in Ukraine and the potential for war with Russia.

Russia’s ruble sank to a record low, while the country’s key stock index plunged 11 percent. Diplomatic efforts ramped up on Monday with UK Foreign Minister William Hague visiting Kiev, a day before US Secretary of State John Kerry is to arrive.

In afternoon trading in New York, the Dow Jones Industrial Average dropped 1.28 percent, the Standard & Poor’s 500 Index shed 0.99 percent, while the Nasdaq Composite Index fell 1.23 percent.

Declines in shares of Visa, down 2.3 percent, and those of 3M, down 1.9 percent, led the Dow lower. All 30 members of the index were down.

Some analysts said the decline on Wall Street was partly due because of the recent rally—the S&P 500 had closed at a record high on Friday.

"If you need an excuse to sell, this is a good one," Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey told Reuters.

Some analysts predicted the crisis will not escalate, which will limit the impact on equity markets.

“Our base scenario is that we don’t see an outright escalation,” Peter Garnry, an equity strategist at Saxo Bank in Copenhagen, told Bloomberg News. “The grip on markets should be short lived.”

Others disagreed, expressing concern about a broad and long-term impact.

“The situation in the Ukraine will have a big impact on corporate earnings,” Robert Halver, head of capital-markets research at Baader Bank in Frankfurt, told Bloomberg. “I see no quick solution to the problem. The energy supply to western Europe is at risk at the moment.”

In Europe, the Stoxx 600 Index ended the day with a 2.3 percent slide from the previous close. The UK’s FTSE 100 fell 1.5 percent, France’s CAC 40 retreated 2.7 percent, while Germany’s DAX sank 3.4 percent.

West Texas Intermediate crude soared to a five-month high, rising as much as 2.6 percent.

Bullion also gained as investors looked for a safe-haven investment. Gold futures for April delivery climbed 2.4 percent to US$1,353.80 an ounce.

The accelerating international tension certainly stole the focus from better-than-expected US economic data. The Institute for Supply Management’s index of national factory activity climbed to 53.2 in February, up from 51.3 in January.

Separately, consumer spending rose 0.4 percent in January, following a 0.1 percent increase in December, according to Commerce Department data.

(BusinessDesk)

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