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FTSE falls as Ukraine plane crash and Russia sanctions weigh
by Daniel Grote on Jul 17, 2014 at 16:47
The FTSE 100 has extended losses as the latest round of US sanctions against Russia weighed on the UK's blue-chip index, with reports of a passenger plane crashing in Ukraine prompting further share price falls in late trading.
The FTSE 100 closed 46 points, or 0.7%, down at 6,738, after the US announced measures targeting a number of Russian firms over what it claimed was Moscow's failure to curb separatist violence in eastern Ukraine. Reports of a passenger jet crashing in eastern Ukraine, with one Ukrainian official reportedly claiming it had been shot down by militants, led to a sharp slump in shares in late trading.
Russia’s Micex index fell 2.4%, with oil and gas groups Novatek (NVTK.MM) and Rosneft (ROSN.MM) down 5.5% and 4.3% respectively. Both companies are specifically targeted by the sanctions, and will be denied long-term loans from US entities.
'Just as stocks in Europe were recouping losses from the Banco Espirito Santo sell-off, a fresh round of sanctions on Russia has forced European investors to scale back investments in any stocks potentially affected,' said Jasper Lawler, market analyst at CMC Markets UK.
The news helped support the oil price above $107 per barrel, while gold jumped to $1,314.66.
The JPMorgan Russian Securities (JRS) investment trust was one of the biggest fallers on the FTSE Small Cap index on the news, dropping 4.6% to 454.3p.
Investors meanwhile responded enthusiastically to Liberty’s acquisition of a stake in ITV, deeming the broadcaster a possible mergers and acquisition (M&A) target.
‘We would not expect an immediate bid, but Liberty’s purchase suggests it may be interested in acquiring the asset at some point as Virgin Media (which Liberty owns) tried to do nearly a decade ago,’ said analysts at Liberum.
‘ITV is now likely to be seen as a potential M&A story (especially given recent newsflow in the media sector).’
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