Reuters - Video

EDITION: U.S. | U.K. | IN

Business

Europe's Russia sanctions dilemma

11:19am EDT - 02:04

Russia's President says he hopes ''common sense'' will prevail over the latest sanctions threat. With Germany's economy showing signs of running out of steam Ciara Lee asks if Europe can afford to hit Russia hard?

▲ Hide Transcript

View Transcript

Use common sense - that's President Putin's latest warning to the West over the possibility of fresh sanctions against Russia. EU leaders are preparing new measures against Moscow. But no definite ones have been agreed yet or when they will be imposed. Anxiety over Ukraine is already hurting some of their economies - even Germany. The power house of the euro zone saw a contraction in the second quarter for the first time in over a year. Baader Bank's Robert Halver. (SOUNDBITE) (German) HEAD OF CAPITAL MARKET ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING: "We are seeing a battle: geopolitics versus monetary policies. The geopolitical aspect is explosive because it concerns the German and the European economy. Yet Europe wants to decide on sanctions against Russia later this week. This is not good for the DAX." Gross capital investment in Europe's biggest economy fell over 2 percent and construction investment dropped by 4 percent. Even foreign trade, traditionally the driver of German economic growth, was slightly down. But NAB's Tom Vosa says the problems aren't entirely related to Russia and Ukraine. (SOUNDBITE) (English) "It's possible that Germany will end up in a technical recession by the end of the third quarter. Europe is going to slow because of this no net export led growth. Europe was slowing anyway and I think Russian sanctions on top yes it will hurt. But the underlying picture was one of very weak European demand, an economy that was slowing and an ECB, which unfortunately having cut rates, may have left it a little too late." Italy also fell back into recession over the same period. And France - already in it - stagnated, with manufacturing activity falling at its fastest pace in 15 months. Overall euro zone manufacturing growth also slowed more than expected as new orders dwindled. It's all adding to Europe's dilemma over the sanctions - and that's without the region's reliance on Russian energy. They will be buoyed by one development though Australia is escalating its sanctions. It's banning arms exports and will deny state-owned Russian banks access to Australia's capital market.

Europe's Russia sanctions dilemma

11:19am EDT - 02:04

Top News »

Money »

S&P 500 to new record on improving economy S&P 500 to new record on improving economy

Fri, Aug 29, 2014 - (2:31)

Finding meaning in the S&P 500 2000 mark Finding meaning in the S&P 500 2000 mark

Mon, Aug 25, 2014 - (2:35)

S&P falls back from record high S&P falls back from record high

Fri, Aug 22, 2014 - (1:35)

S&P 500 closes at new high S&P 500 closes at new high

Thu, Aug 21, 2014 - (1:24)

S&P 500 just shy of record S&P 500 just shy of record

Wed, Aug 20, 2014 - (2:23)

Apple hits $100 a share Apple hits $100 a share

Tue, Aug 19, 2014 - (2:06)

Nasdaq closes at 14-year high Nasdaq closes at 14-year high

Mon, Aug 18, 2014 - (2:23)

Putin puts Wall Street in buying mood Putin puts Wall Street in buying mood

Thu, Aug 14, 2014 - (2:10)

We've become a promotional culture-RetailMeNot's Bodge We've become a promotional...

Thu, Aug 14, 2014 - (4:39)

The Exchange »

The Exchange: Hot commodity The Exchange: Hot commodity

Wed, Jul 16, 2014 - (9:25)

The Exchange: Constitutional crusade The Exchange: Constitutional crusade

Wed, Jun 25, 2014 - (11:35)

The Exchange: The value of money The Exchange: The value of money

Mon, Jun 02, 2014 - (9:53)

The Exchange: China’s Second Continent The Exchange: China’s Second Continent

Tue, May 27, 2014 - (9:35)

The Exchange: A master of business arts The Exchange: A master of business arts

Thu, May 08, 2014 - (8:24)

The Exchange: America's bankrupt cities The Exchange: America's bankrupt cities

Mon, May 05, 2014 - (8:52)

The Exchange: Let the rocking commence The Exchange: Let the rocking commence

Tue, Apr 08, 2014 - (8:13)

The Exchange: The Moneyball fallacies The Exchange: The Moneyball fallacies

Mon, Mar 24, 2014 - (9:54)

Is doing good a good business? Is doing good a good business?

Mon, Mar 17, 2014 - (7:38)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, Feb 19, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, Jan 10, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, Aug 29, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, Aug 29, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, Aug 05, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, Dec 17, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sat, Dec 08, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Sun, Dec 09, 2012 - (10:39)

Moving Pictures »

Images of August Images of August

Fri, Aug 29, 2014 - (1:00)

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, Aug 22, 2014 - (3:12)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, Aug 11, 2014 - (2:27)

Burned memories Burned memories

Fri, Aug 08, 2014 - (3:02)

Images of July Images of July

Thu, Jul 31, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, Jul 11, 2014 - (1:00)

A refugee in America gives back A refugee in America gives back

Wed, Jul 02, 2014 - (3:25)

A long search for refuge A long search for refuge

Fri, Jun 20, 2014 - (3:04)

World Cup: Around the globe in 50 goals World Cup: Around the globe in 50 goals

Fri, Jun 06, 2014 - (1:08)

VIVID – Sydney’s spectacle of light VIVID – Sydney’s spectacle of light

Fri, May 30, 2014 - (1:37)