European Shares Down on Russia Sanctions Concerns

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European Shares Down on Russia Sanctions Concerns

Fresh harsher measures on Russia hit European stock markets as investors assessed possible repercussions for the measures. However, Spanish stock indexes, were spared, buoyed by better-than-expected growth figures for the nation.

Both the US and the European Union expressed willingness late Tuesday to slap Russia with more sanctions, with fresh prohibitions aimed at energy, defense and finance sectors of the countries. In the financial sector, the EU is restricting access to capital markets for state-owned lenders in Russia. It will also halt shipment of certain goods and technologies to Russia to make it more difficult for the country to exploit its oil resources in the long run, MarketWatch Reported.’

The US Treasury announced it will outlaw American citizens from purchasing new shares or bonds from the three key Russian financial firms, restricting their access to US financing. The targeted lenders are Bank of Moscow, Russian Agricultural Bank and VTB Bank.

On Wednesday, Spain reported surprise better-than-estimated economic growth data for the second-quarter. The country’s economy surged 0.6% in three months, topping projections by the central bank and registering the strongest growth pace in six years.

In the meantime, additional data published Wednesday indicated that Spanish consumer prices plunged in July for second straight month, fueling fears of a sustained phase of deflation.

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The Stoxx Europe 600 Index slipped 0.5% to 340.44 as market closed.

The FTSE100 Index of Britain lost 0.5%, Germany’s DAX Index declined 0.6% and France’s CAC 40 slid 1.2%.

“We have seen a mixed bag of corporate earnings. “European and Swiss companies have to deal with negative currency effects. Tightened sanctions against Russia are hurting sentiment. Russia has already warned of consequences,” Alessandro Fezzi of LGT Bank Schweiz AG in Zurich told Bloomberg.

Fezzi added that he didn’t think the hostilities over Ukraine were about to end soon, implying a sustained impact on market sentiment.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com