The FTSE 100 has fallen as reports that Russian troops had crossed the border into the Ukraine sent jitters around world stock markets.
The UK blue-index was down 23 points, or 0.3% at 6,808 points, having earlier fallen below the 6,800 mark, as Ukraine president Petro Poroshenko effectively accused Russia of invading his country.
'I have made a decision to cancel my working visit to the Republic of Turkey due to sharp aggravation of the situation in the Donetsk region, particularly in Amvrosiivka and Starobeshevo, as Russian troops were actually brought into Ukraine,' he said in a statement. Russia has denied troops entered the country.
Russia's Micex 10 index was down 2.6% on the news. 'European stocks continued to trade in the red, dropping from one-month highs as geopolitical uncertainty resurfaced,' said Lee Mumford, financial sales trader at Spreadex. 'Investors reduced their exposure to risk after pro-Russian rebels widened their attack on Ukraine's forces.' That uncertainty sent the gold price higher to $1,291.60, as investors reached for the safe haven asset.
Fresh evidence of surging US economic growth in the second quarter meanwhile increased the likelihood of an earlier-than-expected interest rate rise across the pond. The second estimate of US gross domestic product (GDP) growth came in at 4.2%, up from the 4% initial estimate, demonstrating a strong bounce-back following the first quarter slump prompted by the freezing winter.
'With unemployment falling, consumer confidence at its highest level since 2007 and now GDP hitting 4.2%, the skies above [Federal Reserve boss] Janet Yellen's head are getting brighter,' said Dennis de Jong, managing director of foreign exchange broker UFX Markets. 'An earlier-than-expected interest rates rise is now surely on the cards.'
Hot chip stocks surge on takeover reports
10:28 Shares in mobile phone chip maker CSR (CSR) have rocketed in the morning’s trading amid reports of a series of takeover offers for the company.
CSR, formerly known as Cambridge Silicon Radio, jumped 24% to 138.5p, as the Financial Times reported a possible £3 billion (£1.8 billion) deal for the company, which has a market cap of around £1.2 billion.
The paper claimed CSR was exploring a sale after ‘receiving takeover offers from various rival semiconductor manufacturers’.
CSR said in a statement that it had rejected an approach from US rival Microchip Technologies (MCHP.O). 'The board of CSR notes recent press speculation and confirms that it has received an approach regarding a possible offer for the compnay from Microchip,' it said. 'The price proposed by Microchip has been rejected and the board is considering its options for the company,' it said.
Rival Imagination Technologies (IMG), a fellow ‘mid cap’ stock, which makes microchips for Apple, also enjoyed a surge, rising 6.3% to 216.4p.
Investors have been excited about the takeover prospects for a number of internet and mobile phone technology stocks after Google paid $3.2 billion for Nest Labs, which manufactures ‘smart’ thermostats.
Online gambling company Playtech (PTEC) was another big mid cap riser, jumping 7.8% to 714.5p after announcing profits were likely to beat forecasts this year.
In a morning where most of the big moving stocks were to be found on the FTSE 250, Xaar (XAR) was a heavy faller as the industrial inkjet company cut its revenue forecast for the second time in three months. Xaar shares fell 21.4%, to a 16-month low of 440.5p as it blamed slowing demand from the ceramic tile sector for a likely drop in revenue.
Online retailer Ocado (OCDO) was another heavy faller, dropping 13.2% to 350p as a series of sell-side firms downgraded the stock.
The FTSE 100 meanwhile edged 14 points, or 0.2% lower, to 6,816, with miners weighing on the index due to a drop in iron ore prices in China.