* Yen builds on sharp overnight gains against dollar, euro
* Russian shares plummet before Sunday's Crimea referendum
* World stock index and S&P 500 fall; equities down for week
By Caroline Valetkevitch
NEW YORK, March 14 Growing tension between the
West and Russia ahead of Ukraine's weekend referendum in Crimea
pushed down stocks on major world markets on Friday and drove up
buying of safe-haven gold and the yen.
Financial markets watched nervously as the West increasingly
talked about sanctions and Russia hit back with promises of
retaliatory measures and displays of military prowess. The vote
being held on Sunday by pro-Moscow authorities is to determine
if Crimea will join Russia.
Jitters also remained over the degree to which China's
economy is slowing after unsettling data this week and China's
first corporate bond default.
Stocks posted hefty losses for the week, with the MSCI
global market index falling 2.5 percent, its
worst weekly decline since June. Gold rose to a six-week high on
Friday and gained 3 percent this week.
On Friday, Moscow's MICEX index fell more than 5
percent before recovering to end down 0.9 percent. The rouble
was close to recent record lows.
Russia's central bank on Friday kept lending rates on hold
after raising them two weeks ago and said it would fight for
financial stability after the standoff with the West over
Crimea. The bank said there would be no easing of rates in the
months ahead, suggesting it expects more tough times ahead for
the rouble and for stocks, which have lost about a quarter of
their value since mid-February.
Part of the concern over the Crimea referendum on Sunday is
that it could encourage other pro-Moscow parts of the country to
follow suit and potentially embolden Russia in the region.
"It's the primary drag on equities and risk assets this week
because of the uncertainty as to how the events will play out,
particularly the referendum this weekend and what the response
from the rest of the world and Russia will be to that," said
Bucky Hellwig, senior vice president at BB&T Wealth Management
in Birmingham, Alabama.
U.S. Secretary of State John Kerry met Russian counterpart
Sergei Lavrov in London in last-ditch diplomatic efforts to
defuse tensions, but Moscow and the West appeared increasingly
Russia shipped more troops into Crimea on Friday and
repeated its threat to invade other parts of Ukraine. A German
newspaper reported that the chief executive officers of Russia's
two largest firms are on a list of those who may be hit next
week with European and U.S. sanctions.
U.S. stocks ended lower, and the S&P 500 posted a 2 percent
decline for the week, its biggest weekly drop since late
January. For the day, the Dow Jones industrial average
fell 43.22 points, or 0.27 percent, to 16,065.67, the S&P 500
lost 5.21 points, or 0.28 percent, to 1,841.13, and the
Nasdaq Composite dropped 15.023 points, or 0.35 percent,
The S&P 500 ended below the key technical support level of
1,850 for a second day.
The FTSEurofirst 300 index of top European shares
closed down 0.7 percent. Shares of companies most exposed to
Russia fell, including Danish brewer Carlsberg, down
Latin American stocks also fell, with Mexico's IPC stock
index down 0.2 percent.
Spot gold rose as much as 1.4 percent to its highest
level since Sept. 9 at $1,387.90 an ounce early in the session
before it later pared gains.
DOLLAR LOSING GROUND VS YEN
In the foreign exchange market, the latest developments in
the Ukraine crisis sent the safe-haven yen soaring against both
the dollar and the euro. The yen was headed for its biggest
weekly gain in more than a month against the dollar.
The euro fell as much as 0.5 percent against the yen in
early U.S. trading before trimming losses to trade 0.25 percent
lower at 140.88 yen.
The dollar fell 0.5 percent to 101.36 yen. On the
week, the dollar has lost 1.7 percent, which would be its
biggest loss since late January.
"I don't think anyone wants to hold any large risky
positions going into the weekend," said Shaun Osborne, chief
foreign exchange strategist at TD Securities in Toronto.
U.S. Treasuries prices inched up on the Ukraine worries and
after data showing low U.S. inflation and a dip in consumer
sentiment. The 10-year U.S. Treasury note was last
up 1/32 in price to yield 2.647 percent, compared with late
Thursday when the yield was at 2.653 percent.
"The demand for Treasuries as a safe-haven security is so
overpowering it will be a positive underpinning, even if we see
short-term selling on the part of any individual entity," said
Margaret Patel, senior portfolio manager at Wells Capital
Management in Boston.
U.S. economic data showed consumer sentiment weakened in
early March as an unusually harsh winter appeared to dim views
on the economy's prospects. The Labor
Department, meanwhile, said U.S. producer prices fell in
In the oil market, Brent rose more than $1 a barrel ahead of
the planned Crimea referendum. The Brent crude oil contract for
April delivery, which expired Friday, settled $1.18
higher at $108.57. The May contract, which will become the front
month contract on Monday, settled $1.29 higher at $108.21.
Even so, Brent ended lower for a third straight week.
Copper, whose demand is seen falling as Chinese economic
growth slows, edged higher on Friday but fell 4.6 percent for
Benchmark three-month copper on the London Metal
Exchange, untraded at the close, was bid at $6,468.50, up 0.8
percent from Thursday's close. It sank to a 44-month low of
$6,376.25 on Wednesday.
Chinese Premier Li Keqiang warned on Thursday that the
economy faced "severe challenges" in 2014 while expectations of
more debt defaults kept alive worries about the state of its