Some calm has returned to financial markets, after Russia said it would only recognise the Donetsk and Luhansk territories’ independence within the boundaries that the Moscow-backed separatists currently control, and as Ukrainian president Volodymyr Zelenskiy played down the prospect of a large-scale conflict with Russia.
Asian shares recorded some chunky losses, with Japan’s Nikkei losing 1.7% and Hong Kong’s Hang Seng tumbling 2.7%. The main European stock markets in Germany, France, Spain and Italy all slid more than 2% in early trading but later clawed back most of their losses.
The FTSE 100 index in London closed 11 points lower at 7,495.97, a 0.16%% drop. Germany’s Dax lost 0.4% while France’s CAC slipped 0.16%, and Italy’s FTSE MiB and Spain’s Ibex were flat.
The rouble has recovered from a near two-year low after suffering its biggest one-day drop, of 3.3%, since the outbreak oof the coronavirus pandemic on Monday. The Russian currency fell to 81 against the dollar and is now trading at 79.18.
Russian stock markets also staged a small comeback after earlier losses, with the dollar-denominated RTS index and the rouble-denominated Moex index on the Moscow exchange both rising 1.6% this afternoon.
Shares in Russia’s largest lender Sberbank rose 1.3% (after an earlier gain of 5%) while the second-biggest bank VTB was up 1.7%, after they escaped British sanctions. They were not on the list of five banks that are to be sanctioned by the UK.
However, the two state-backed banks are among a number of Russian companies that have secondary listings in London, and their London-listed shares are still down, albeit not nearly as much as earlier. Sberbank fell 1.4% in London after plunging 13% this morning while VTB has lost 1.6%.
State-backed oil and gas producer Gazprom fell 3.4% after an earlier loss of 8%, while Rosneft ended the day nearly 8% lower and Lukoil closed down 5.3%.
Shares in PAO Novatek, the largest gas producer in Russia…