European shares fall on MH17 worries

Shares dropped this morning as investors reacted with caution to renewed geopolitical tensions in Ukraine.

by Emma Haslett
Last Updated: 30 Jul 2014

Markets opened lower this morning on renewed fears over political tensions in Europe after Malaysian Airlines flight MH17 was shot down in Ukraine yesterday.

The FTSE 100 fell 0.36% in early trading, while Germany's DAX fell 0.41% and France's CAC 40 dropped 0.13%. Russia's MICEX was down 1.36% by mid-morning.

Airline stocks were hit by the crisis: shares in Air France-KLM, which operates the same route as the downed Malaysian aircraft, dropped 1.65%, while Germany's Lufthansa fell 0.48% - although International Airlines Group, which owns British Airways and Spanish airline Iberia, rallied 1.65% after a 2.67% slide yesterday.

Source: Yahoo Finance

In Asia, markets closed lower: Hong Kong's Hang Seng index fell 0.28%, while Japan's Nikkei fell 1.01%.

Questions will now be asked over whether Europe will now back US plans for tougher sanctions against separatist factions in Ukraine. Yesterday, both the US and Europe issued sanctions against a number of groups, although the US' list of targets named specific companies (including oil giant Rosneft and gun maker Kalashnikov), perceived to be aiding pro-Russian rebels.

The EU, on the other hand, focused on 'entities' helping Ukrainian separatists and 'providing material and financial support' to those leading the annexation of the Crimea.

But if there was ever a question mark over whether Europe should become more closely involved in the crisis, leaders of the European countries with passengers among the 298 onboard MH17  - the Netherlands, the UK, Germany and Belgium - may be of the view that now is the time to wade in. Although analysts point out that this may be what Russia needed to be pressured into a finding a resolution. Investors, though, remain cautious.

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