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The
two sides traded accusations each had fired across the ceasefire
line in eastern Ukraine, raising alarm at a time when Russia has
massed more than 100,000 troops close to Ukraine's borders. The
West accuses Russia of preparing for an invasion, while Moscow
says it is pulling back some troops and accuses Kyiv of planning
an escalation to try to recapture rebel-held territory by force.
Losses on stock markets were widespread, though not as big as in
recent sessions.
In Europe, the Euro STOXX had slipped 0.1% by 1150 GMT while
Britain's FTSE 100 dropped 0.65%. Strong corporate earnings in
Europe helped keep the losses in check.
Wall Street futures pointed to a lower open, while in Asia
MSCI's broadest index of Asia-Pacific shares eked out a 0.15%
rise by the close.
The MSCI world equity index, which tracks shares in 50
countries, was slightly lower on the day.
Westpac analyst Sean Callow said markets were "clearly on edge"
and vulnerable since a lot of traders had assumed tension was
easing.
Investors bought into government bonds. Yields on the U.S.
10-year Treasury note dropped as much as 6 basis points and were
last down 1 bps at 2%.
Yields on Germany's 10-year government bond, the go-to
safe-haven asset in the euro zone, were little changed at
0.267%.
The Russia-Ukraine crisis is unnerving investors just as markets
were already struggling. Investors are worried the pace of
monetary policy tightening -- triggered by central banks needing
to tame soaring inflation -- and a reduction in cheap cash will
take more of the air out of highly valued asset prices.
Most major markets are down sharply in 2022, with the tech-heavy
Nasdaq off 12%.
Some investors advised clients not to panic over the
geopolitical crisis, however.
"Drawdowns driven by geopolitical stress events are typically
short-lived for well-diversified portfolios," said Mark Haefele,
chief investment officer at UBS Global Wealth Management.
He added that their base case was a "relaxation of geopolitical
tensions".
GOLD SHINES
Gold prices broke higher to hit an eight-month high of $1,892 an
ounce, up 1.2% on the session and helped by nervousness across
markets and a weaker dollar.
Crude oil prices fell sharply but were off their lows. They had
earlier tumbled more than 2% on optimism that negotiations will
salvage Iran's 2015 nuclear deal and bring more supply to a
tight market.
U.S. West Texas Intermediate (WTI) crude was last down 2.1% at
$91.65 a barrel, while Brent slid 1.86% to $93.05 a barrel.
Worries about a super-hawkish Fed rate-tightening campaign,
potentially including a 50 basis-point hike next month, took a
step down overnight after minutes of the latest policy meeting
signaled a more measured, data-dependent approach from central
bank officials.
The dollar, also regarded as a safe haven, initially rose
against most currencies but those gains subsided and the
greenback was marginally lower by 1150 GMT - a sign investors
were not yet panicking about the Russia-Ukraine tensions.
However the Japanese yen, a currency investors usually buy when
they are nervous, hit its strongest since Feb. 7, with the
dollar down 0.4% to as weak as 114.95 yen.
(Additional reporting by Kevin Buckland and Selena Li in Tokyo;
Editing by Kim Coghill, Kirsten Donovan)
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