A view of the London Stock Exchange. The British benchmark FTSE 100 index edged down 0.04% to 6,775.25 points yesterday.

European stocks fell yesterday, hit by fresh signs of an escalation of the conflict in Ukraine after a key speech from US Federal Reserve chief Janet Yellen left markets adrift.

The British capital’s benchmark FTSE 100 index edged down 0.04%, ending the day on 6,775.25 points.

The London market will remain closed on Monday for a public holiday.

Frankfurt’s main DAX index lost 0.66% to 9,339.17 points while in Paris, the CAC 40 sank 0.93% to 4,252.80 points, compared with Thursday’s close.

“Global equity markets faced broad selling pressure yesterday as investors took profits on flaring geopolitical tensions,” said Kash Kamal at Sucden Financial.

“European benchmark equity indices had found tentative support around Thursday’s close but as news of Russia’s aid convoy crossing into Ukraine broke, stocks across the region pared some of the weekly gains.”

Shares sank after news the first lorries of a mammoth Russian aid convoy had arrived in east Ukraine’s rebel bastion of Lugansk after crossing over the border without Kiev’s permission.

Kiev called the action an invasion and the EU a “clear violation” of Ukraine’s border, accusations that Russia rejected.

The news interrupted a quiet session as investors awaited news from the Fed’s annual central banking symposium.

“There was a sudden sell-off midway through the European trading session when memories came flooding back of last Friday afternoon with headlines of a Russian convoy moving into Ukraine,” said Jasper Lawler at CMC Markets.

Federal Reserve Chair Janet Yellen gave no clear new signs for the future of monetary policy in the world’s biggest economy in a closely watched speech to leading central bankers in Jackson Hole, Wyoming.

There still remains “considerable uncertainty about the level of employment,” she said, admitting that analysing economic data had been “especially challenging recently”.

“There is no simple recipe for appropriate policy in this context,” she said.

The European single currency slumped to its lowest point in almost a year against the dollar at $1.3221 as Yellen’s comments supported the greenback.

The euro later recovered to $1.3233, from $1.3281 late in New York on Thursday.

“Comments made by Yellen indicate a more neutral viewpoint on the amount of spare capacity in the labour markets, hinting at the possibility of a rate rise earlier than previously expected,” said Kamal.

US stocks pared some earlier losses after the gains, although the S&P 500 lost ground compared to Thursday’s record close.

In mid-afternoon trading, the Dow Jones Industrial Average fell 0.16% to 17,012.68 points.

The broad-based S&P 500 dipped 0.15% to 1,989.43, while the tech-rich Nasdaq Composite Index rose 0.16% to 4,539.27 points.

European equities had marched higher on Thursday, cheered by hints the Fed could raise interest rates sooner than expected in view of US growth.

The Jackson Hole Symposium on Friday will also feature speakers from the Bank of England, the European Central Bank and the Bank of Japan.

 

 

 

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