By Sujata Rao
LONDON, April 28 World stocks held just off
10-day lows on Monday, pressured by tensions between Russia and
the West over Ukraine, although European markets were buoyed by
a 15 percent jump in takeover target AstraZeneca.
Markets, especially in Asia, also took a hit from signals
that Chinese authorities are not likely to support the economy
with more stimulus, but the main impetus was coming from
developments in Ukraine.
Leaders of the Group of Seven (G7) major economies could
announce far-reaching sanctions on Russia as early as Monday,
extending previous limited measures against some Russian
individuals and companies for their role in Moscow's annexation
of Ukraine's Crimea region.
Heavily-armed pro-Russian separatists, who Kiev and the West
believe are backed by the Kremlin, have proclaimed an
independent "people's republic" in the eastern Ukrainian city of
Donetsk, while holding several European monitors hostage in
Fears of outright war are weighing on world stock markets,
boosting oil prices and prompting some investors to seek safety
in assets such as the yen, which was close to one-week highs
against the dollar.
"With the Russia-Ukraine crisis rumbling on, affecting
financial markets in both emerging and developed economies,
investors are apt to ask for how long it will continue," SEB
analyst Per Hammarlund said.
"If (Russian President Vladimir Putin) continues to pursue
this tactic (of supporting rebels from outside) the implications
are that the process will be drawn out for global markets."
MSCI's world equity index, which tracks
shares in 45 countries, was flat after falling 0.7 percent on
Friday. But European stocks rose 0.4 percent, after
drugmaker U.S. Pfizer announced a bid for British rival
Expectations of merger-related inflows also helped sterling
to a new 4-1/2 year high.
Emerging stocks slumped to a one-month low,
however, dragged down by a 1.5 percent fall in China
where President Xi Jinping was reported as telling a Politburo
meeting that fiscal and monetary policies would stay unchanged.
Russian stocks fell 1 percent while the cost of
insuring against a Russian default in the credit default swaps
(CDS) market jumped to the highest since November 2011.
The potential energy implications of a war in Ukraine or
even Western sanctions against Russia are keeping oil prices
elevated, with Brent crude futures rising above $110 a
barrel and heading for a recent seven-week high. June U.S. crude
futures were up 71 cents to $101.32 a barrel.
"The way Russia can really hurt the west is to shut off
energy supplies. So people feel that there's a possibility, I
guess," said Tony Nunan, a risk manager at Mitsubishi Corp.
The dollar pulled back against a basket of six major
currencies, touching a two-week low ahead of a meeting of
the U.S. Federal Reserve which is expected to see the central
bank cut another $10 billion from its monthly bond-buying plan.
The euro meanwhile firmed to two-week highs against the
dollar before mid-week data that is expected to show inflation
ticking higher, easing pressure on the European Central Bank to
loosen monetary conditions in the near term.
On bond markets, Slovenian 10-year bond yields
jumped 19 basis points to 3.89 percent after Prime Minister
Alenka Bratusek lost a vote for the leadership of her
centre-left party, Positive Slovenia.
German Bund futures moved 10 ticks lower.
(Editing by Catherine Evans)