# European stocks drop as Russia-Ukraine tensions escalate
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-02-17
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: European Shares Fall Amid Russia-Ukraine Tensions
Meta Description: SOCGEN, Commerzbank and travel stocks suffer losses as Biden warns of potential conflict; market underappreciates risks, according to Rabobank.
URL: https://financedigest.com/european-stocks-drop-as-russia-ukraine-tensions-escalatehtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-02-17t083239z1lynxmpei1g0awrtroptp4europe-stocks-1736816209070-compressed.jpg)

By Sruthi Shankar and Shashank Nayar

(Reuters) -European shares fell on Thursday as heightened Russia-Ukraine tensions eclipsed a slew of encouraging earnings from companies such as Kering, Reckitt Benckiser and Commerzbank.

The pan-European STOXX 600 index fell 0.7% with banking and energy shares leading declines as oil prices dropped and benchmark European bond yields slipped for the second consecutive session as investors sought shelter in the safety of bonds.

There was also a fall in yields on the German 10-year government bond, the go-to safe-haven asset in the [euro zone](https://www.financedigest.com/euro-zone-recovery-gathers-pace-allays-fears-of-recession-pmi.html "Euro zone recovery gathers pace, allays fears of recession-PMI").

U.S. President Joe Biden said on Thursday there was now every indication [Russia was planning to invade Ukraine](https://www.financedigest.com/russia-promises-to-scale-down-operations-in-northern-ukraine.html "Russia promises to scale down operations in northern Ukraine"), including signs Moscow was carrying out a false flag operation to justify it, after Ukrainian forces and pro-Moscow rebels traded fire. nL1N2US0M8

The Kremlin accused [Biden of stoking tension](https://www.financedigest.com/biden-begins-fifth-call-with-chinas-xi-looking-to-tamp-down-taiwan-tension.html "Biden begins fifth call with China’s Xi, looking to tamp down Taiwan tension") and released a strongly worded letter which accused Washington of ignoring its security demands and threatened unspecified “military-technical measures. Moscow also ejected the number two official from the U.S. embassy.

We believe the [market is underappreciating the potential](https://www.financedigest.com/modified-starch-market-potential-growth-share-demand-and-analysis-of-key-players-forecasts-to-2032.html "Modified Starch Market Potential Growth, Share, Demand and Analysis of Key Players – Forecasts to 2032") risks that are out there,” Elwin de Groot, senior market economist at Rabobank, said.

If you look at commodity [markets in recent](https://www.financedigest.com/bev-automotive-oil-filter-market-recent-industry-developments-and-growth-strategies-adopted-by-players.html "BEV Automotive Oil Filter Market: Recent Industry Developments and Growth Strategies Adopted by Players") weeks, there’s huge volatility and prices increases, especially in the energy complex. That [raises the potential for more nasty inflation surprises in the coming months.”](https://www.financedigest.com/italys-leonardo-raises-fy-orders-guidance-after-strong-nine-months.html "Italy’s Leonardo raises FY orders guidance after strong nine months")

Travel [stocks were the top losing European](https://www.financedigest.com/european-stocks-hit-six-week-high-on-hopes-for-rate-hike-slowdown.html "European stocks hit six-week high on hopes for rate hike slowdown") sub-index, down 1.7%, over fears that the potential conflict could derail the recovery of the sector, especially of airline stocks.

France’s CAC 40 slipped 0.3%, the least among its European peers, boosted by a 5% jump in luxury goods maker Kering after it reported sharp growth in quarterly sales on the [back of its top Gucci brand](https://www.financedigest.com/2016-the-fight-back-of-the-established-brand.html "2016 – THE FIGHT BACK OF THE ESTABLISHED BRAND"). Peer Hermes added 1.1%

Key volatility gauges in markets have jumped in recent weeks as fears grow of a [war between Russia](https://www.financedigest.com/russia-sharply-scales-back-far-east-war-games-with-china.html "Russia sharply scales back Far East war games with China") and Ukraine. While Moscow has denied it would invade its neighbour, the West has threatened [Russia with harsh economic sanctions](https://www.financedigest.com/russia-unleashes-rockets-after-mariupol-ceasefire-eu-eyes-oil-sanctions.html "Russia unleashes rockets after Mariupol ceasefire, EU eyes oil sanctions").

[Concerns about surging inflation and rising](https://www.financedigest.com/shares-rise-but-concern-mounts-over-inflation-flare-up.html "Shares rise, but concern mounts over inflation flare-up") interest rates have also knocked risk appetite, with traders ramping up bets for aggressive policy tightening from the U.S. Federal Reserve.

However, there has been some respite as 65% of the nearly [half of STOXX 600 companies reporting](https://www.financedigest.com/european-governments-spend-half-a-trillion-euros-on-energy-crisis-report.html "European governments spend half a trillion euros on energy crisis – report") earnings have beaten analysts’ profit estimates, as per Refinitiv data.

Among quarterly earnings, Britain’s Reckitt Benckiser Group rose 5.9% after it [beat fourth-quarter sales](https://www.financedigest.com/yum-beats-sales-estimates-as-customers-flock-to-kfc-taco-bell-deals.html "Yum beats sales estimates as customers flock to KFC, Taco Bell deals") forecasts.

Commerzbank added 3.2% after the [German lender swung to a better-than-expected fourth quarter](https://www.financedigest.com/german-gdp-contracted-by-0-4-in-the-fourth-quarter.html "German GDP contracted by 0.4% in the fourth quarter") and painted a rosy outlook for 2022.

Airbus slipped 1.3% after it predicted [higher profit](https://www.financedigest.com/polish-e-commerce-firm-allegro-eyes-higher-q1-profit.html "Polish e-commerce firm Allegro eyes higher Q1 profit") and deliveries for 2022 but cautioned that supply chain tensions and a spike in inflation remained challenges for now.

Continental jumped 3.3% after Manager Magazin reported the German auto parts supplier is [considering splitting into four separate businesses](https://www.financedigest.com/pizza-firm-dp-eurasia-considers-divestment-of-russian-business.html "Pizza firm DP Eurasia considers divestment of Russian business").

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips, Ramakrishnan M. and Andrew Heavens)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---