European gas prices soared after Russian President Vladimir
Putin said the country would seek payment in roubles for gas
sold to "unfriendly" countries. Russian gas accounts for about
40% of Europe's total consumption, and the move will likely
exacerbate the region's energy crunch and add to inflationary
pressures.
"Economically speaking, Europe just entered a new and
immediately at-risk phase in the Ukraine war," said Clifford
Bennett, chief economist at ACY Securities.
Nervousness was evident as investors scurried to sectors such as
consumer stocks and utilities that are less impacted by economic
crises.
The pan-European STOXX 600 index stayed at Wednesday's levels
when it fell 1% to end a five-session rally.
"Putin's order may serve to lift energy prices, while also
challenging central bank sanctions and impacting EU policy
decisions," said strategists at UBS' Global Wealth Management
team.
Worries over tougher sanctions on Russia heightened as U.S.
President Joe Biden arrived in Brussels for meetings of the NATO
alliance, G7 and European Union. Sanctions thus far have sent
commodity prices soaring on supply shortage fears.
Europe's oil and gas sector rose 0.6% to hit two-week highs. The
index is up about 14% so far this year, surpassed only by the
materials index.
Meanwhile, Russia stocks rose 7.7% as some trading resumed after
a month-long hiatus. [RU/RUB]
Renault SA, the Western carmaker most exposed to the Russian
market, fell 1% after it said it would suspend operations at its
plant in Moscow.
Daimler Truck rose 8.3% after it said it expected little impact
on its business in 2022 from the COVID-19 pandemic and Russia's
invasion of Ukraine, and forecast revenue growth of at least
14%.
After two months of declines on inflation, monetary policy and
war concerns, STOXX 600's meagre gains so far in March are at
stake going into the last week.
Banks and technology stocks fell around 0.3% each, while retail
stock were led lower by a 2.9% drop in British clothing retailer
Next after it trimmed its sales and profit forecast for 2022-23.
(Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu
Sahu and Sriraj Kalluvila)
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