News Column

Stocks slide on crisis in Ukraine, gas talks

June 17, 2014

LONDON: European stock markets fell yesterday on mounting fears over the Iraq crisis which has sent oil prices soaring to recent nine-month highs, dealers said.

Sentiment was also hit after gas supply talks between Russia and Ukraine broke down.

In late morning deals, London'sFTSE 100 index of top companies slid 0.24 percent to 6 761.52 points.

Frankfurt's DAX 30 sank 0.35 percent to 9 878.24 points and in Paris the CAC 40 index dipped 0.59 percent to 4 516.48 compared with Friday's closing levels.

Oil prices advanced yesterday on the back of the worsening crisis in Iraq, where insurgents were advancing on the capital Baghdad. Anti-government fighters, led by the Islamic State of Iraq and the Levant (ISIL) jihadist group, are said to have killed scores of Iraqi soldiers during their offensive, a "horrifying" massacre that has drawn international condemnation.

Brent crude for August delivery rose 34 cents to $112.80 per barrel yesterday, having jumped on Friday to $114.69 - the highest level since |September.

The uncertainty fuelled by the insurgents who have seized a swathe of Iraq, sent traders into safer assets yesterday, with the yen ticking higher against the dollar and the euro while gold also rose.

"Global equities are under pressure as tensions escalate in Iraq and the full impact of a potential increase in oil prices starts to weigh on the market," said Rebecca O'Keeffe, head of investment at online stockbroker Interactive Investor.

"A substantial rise in oil prices could be particularly damaging to the still fragile global economic recovery, as both a tax on oil consumers and a source of higher inflation - which in turn might limit the ability of global central banks to dictate their own timeline and force them to raise interest rates sooner."

Energy companies meanwhile |rallied on the back of higher oil prices, which boost their revenues and |profits. In London, Royal Dutch Shell's "A" share price gained 0.57 percent to 2 384.50 pence, while BP gained 0.12 percent to 508.12 pence.

Investor sentiment was plagued by simmering tensions between Ukraine and Russia.

Europe risked gas supply disruptions yesterday after Russia rejected an 11th-hour compromise deal with Ukraine and cut its supplies in a feud that has further fractured East-West relations.

Ukraine hosted the last-gasp talks hoping to keep an energy shortage from compounding the problems of the new pro-Western leaders as they confront a two-month separatist insurgency threatening the survival of the ex-Soviet state.- Sapa-AFP

Cape Argus

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Source: Cape Argus (South Africa)

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