VIENNA (Alliance News) - European stocks look set to open lower on Friday amid fears that growing geopolitical tensions and fresh sanctions on Moscow could hurt an already-fragile European economy. While keeping interest rates on hold at record lows yesterday, ECB President Mario Draghi warned of increased risks to the euro area's economic recovery.
Investors remain nervous about spillover effects from geopolitical tensions as US President Barack Obama authorized targeted air strikes against militants in Iraq to protect the besieged Yazidi minority and US personnel in the country. The US is also sending cargo planes to drop pallets of humanitarian aid and supplies to help besieged religious minorities in the country.
In news out of Ukraine, Russia has decided to ban some transit flights by Ukrainian airlines to such destinations as Georgia, Azerbaijan, Armenia and Turkey, a day after banning imports of a wide range of agricultural and food products from the US and the EU in response to Western sanction imposed on Moscow over the ongoing conflict in Ukraine. The ban will go into effect immediately and last for one year.
Anders Fogh Rasmussen, the US-led alliance's secretary general, stressed that NATO stands by Ukraine and is looking to strengthen its partnership with the country in response to Russia's aggression.
Asian stocks are mostly lower, with Japanese and Seoul shares bearing the brunt of the selling, amid waning risk appetite. Chinese shares bucked the downward trend after official data showed the country's trade surplus surged to a record in July, with export growth accelerating sharply while imports showed a surprise fall. The safe-haven Japanese yen climbed against its major counterparts after the Bank of Japan offered a bleaker view on exports and output.
Closer home, trade data from Germany and the UK along with French industrial output figures are slated for release in the European session.
Germany's trade surplus is expected to increase to EUR 18.9 billion in June from EUR 17.8 billion in May, while UK's visible trade deficit is estimated to narrow to GBP 8.9 billion in June from GBP 9.204 billion in the previous month. French industrial output is expected to decline 1.8% year-over-year after declining 3.7% in May.
In corporate news, German insurer Allianz SE reported second-quarter net income attributable to shareholders of 1.76 billion euros, up 10.5% from 1.59 billion euros last year.
Hospital operator RhÖn-Klinikum AG reported a surge in first-half 2014 consolidated profit to 1.2 billion euros from 50.76 million euros last year.
Franco-Belgian bank Dexia SA reported first-half net loss group share of 329 million euros, compared with a loss of 178 million euros in the year-ago period.
European stocks closed lower on Thursday after European Central Bank President Mario Draghi warned that tensions between Russia and the West over Ukraine could hurt the region's economic recovery. Draghi didn't announce any new stimulus despite sounding more downbeat on the economic outlook. The German DAX lost a percent, France's CAC 40 shed 1.4% and the UK'sFTSE 100 dropped 0.6%.
The major US averages fell about half a percent each overnight, with the Dow Jones Industrial Average falling to a three-month closing low, as uncertainty following Russia's surprisingly harsh retaliatory measures over Western sanctions overshadowed upbeat jobless claims data.