Heighten tension in Ukraine weighs on stocks

SHARES in London closed down for the third day in a row, after initially opening Friday in the green, as worries over the future of Ukraine intensified.

The FTSE 100 had given back 23.75 points, or 0.3%, closing the week at 7,513.62 after several days of losses.

During the day, the leader of the Donetsk People’s Republic, a self-proclaimed entity in eastern Ukraine whose allegiance lies with Russia, announced an evacuation of the area. Denis Pushilin said that he believed Ukraine was about to invade the area – a claim with no evidence to back it up.

An explosion was reported in Donetsk city by Russia’s state-owned news agency RIA shortly before European markets closed. It was reported to have hit close to the government headquarters.

It could be part of what Western watchers fear is a false-flag operation which will give Russia a pretext to launch an invasion of Ukraine. It had been building forces on the borders for weeks. On Friday, the US said that 190,000 Russian troops are now on the Ukrainian border.

“European markets initially had a more positive tone today... the negativity from yesterday replaced by cautious optimism that there will be no further negative developments ahead of next week’s meeting between US Secretary of State Anthony Blinken, and Russian Foreign Minister Sergey Lavrov,” said CMC Markets analyst Michael Hewson.

“Unfortunately, the early gains soon disappeared on reports that separatist leaders in eastern Ukraine were evacuating their citizens in the region into Russia for their own safety.

“The main drags on the FTSE 100 have been banks, and the oil and gas sector, as the first weekly decline in Brent crude this year weighs on the sector.”

The FTSE was not alone in losing ground. In Germany, the Dax closed down 1,5% while France’s Cac 40 lost 0.3%, while as markets closed in Europe the S&P 500 had lost 0.4% and the Dow Jones was down 0.3%.

Sterling gained 0.01% to buy 1.3585 dollars. One pound could also buy 1.1985 euros, a rise of 0.07%.

The price of a barrel of Brent crude oil rose 0.6% to 93.51 dollars.

In company news, NatWest shares fell despite the company saying it had beaten profit expectations with a nearly £3 billion result for the year, compared to a loss last year. A large part of this was due to adding back £1.3 billion that was set aside to cover potentially bad loans during the pandemic.

Cineworld said it had reached an agreement with former shareholders of its US cinema chain Regal which would allow it to delay final payments by three months.

The London-listed firm agreed to pay 170 million US dollars (£125 million) to shareholders who were frustrated with the price it paid for the business. Shares dropped 2.4%.

The biggest risers on the FTSE 100 were Standard Chartered, up 21.2p to 579.2p, Antofagasta, up 31p to 1,404p, Reckitt, up 121p to 6,273p, Burberry, up 39p to 2,033p, and Airtel Africa, up 2.5p to 336.6p.

The biggest fallers on the FTSE 100 were Evraz, down 22p to 283.2p, Aveva, down 171p to 2,519p, Ocado, down 61p to 1,300p, Flutter Entertainment, down 485p to 10,530p, and Scottish Mortgage Investment Trust, down 44p to 1,015p.