* Stock prices tumble after military intervention in Ukraine
* Gold, bond prices rise on safe-haven buying
* Russia hikes interest rate after ruble slides
* Brent crude hits 2-month high on fear Putin may cut gas
By Herbert Lash
NEW YORK, March 3 Russia's intervention in
Ukraine sent crude oil and prices for gold and government debt
higher on Monday as investors sought safe havens.
Crude prices rose more than $2 a barrel, gold futures jumped
2 percent and top-rated euro zone government bonds surged as
heightened tensions over Ukraine sent investors scrambling.
Russia's stock market was the worst hit, though other equities
markets, including Wall Street, also fell sharply.
Market volatility indexes, a sign of investor apprehension,
surged, with the Euro STOXX Volatility Index rising 23
percent and the U.S. CBOE volatility index up 12 percent.
"Investors had underestimated the risks of an escalation in
Ukraine, so the events over the weekend are a wake-up call for
the market," said David Thebault, head of quantitative sales
trading at Global Equities in Paris.
President Vladimir Putin's forces tightened their grip on
the Crimea region of Ukraine, sparking a plunge in Russian
stocks and forcing Russia's central bank to spend $10 billion of
reserves to prop up the ruble.
Ukraine said Russia was massing armored vehicles on its side
of a narrow stretch of water closest to Crimea after Putin
declared over the weekend that he had the right to invade his
neighbor to protect Russian interests and citizens.
Russia's stock market fell almost 11 percent and the
ruble traded off about 1.3 percent after earlier touching
record lows against the dollar and the euro. The central bank
lifted its base lending rate by 1.5 percentage points to 7
percent at an unscheduled meeting.
Russia's sovereign dollar bonds also fell,
while the cost of buying 5-year swaps to insure against a
Russian debt default jumped 33 basis points.
Ukraine's hryvnia fell to a record low against the
dollar and pushed the country's dollar bonds down 6 points.
Safe-haven German Bund futures rose 65 ticks to 145.03.
Banks took the most points off European stock indices, with
lenders exposed to Ukraine and Russia falling sharply. Austria's
Raiffeisen slumped 8.5 percent, while France's Societe
Generale and Italy's UniCredit both lost 5
The pan-European FTSEurofirst 300 index fell 2.0
percent to 1,321.43.
No major regional stock market escaped aggressive selling,
with all down more than 2 percent and Germany's DAX
particularly hard hit, off 3.0 percent and heading for its
biggest daily fall in eight months.
The declines followed overnight weakness in Asia, with
MSCI's broadest index of Asia-Pacific shares outside Japan
down 0.9 percent and Japan's Nikkei 225
skidding 1.3 percent.
On Wall Street, the Dow Jones industrial average fell
162.51 points, or 1.00 percent, to 16,159.20. The Standard &
Poor's 500 Index was down 15.14 points, or 0.81 percent,
at 1,844.31. The Nasdaq Composite Index was down 40.80
points, or 0.95 percent, at 4,267.32.
The dollar and yen gained as investors sought the safety of
those currencies after Russia's intervention in the Crimean
The greenback was further supported by economic data showing
an increase in U.S. personal income and spending in January in
the midst of one of the worst winters in recent memory.
The dollar index was up 0.28 percent to 79.918. The
dollar's gains pushed the euro 0.37 percent lower at
"Investors turned to classic safe havens amid heightened
tensions in Ukraine," said Joe Manimbo, senior market analyst at
Western Union Business Solutions in Washington.
Crude oil prices jumped. Brent crude hit a peak of
$112.39 a barrel, its highest since Dec. 30, and was up $2.27 at
$111.34. U.S. crude jumped $2.09 to $104.68 a barrel.
U.S. government bond prices rose, with the 10-year note
up 11/32] in price to yield 2.6208 percent.