By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- European stocks dropped Tuesday, with
the losses picking up pace following reports that the crisis in
Ukraine had escalated.
The Stoxx Europe 600 index closed lower by 1% at 326.58 after a
flurry of late-afternoon reports about various military activity in
Ukraine, stoking fears that the country is on the brink of a civil
war.
Russian news agencies reported Kiev-led forces had surrounded
the city of Slavyansk in eastern Ukraine, with ITAR-TASS quoting
Slavyansk's acting mayor as saying armored vehicles were in place
around the area. Meanwhile, part of Russia's 45th Airborne Regiment
was seen in the towns of Kramatorsk and Slavyansk, Ukrainian First
Deputy Prime Minister Vitali Yarema said on television, according
to a Bloomberg report.
Earlier Tuesday, Ukraine launched a military operation to win
back control of eastern Ukrainian cities from pro-Russian
activists. Russia's state-run RIA Novosti news service reported
that four militants were killed and two wounded when Ukrainian
forces stormed an airport in Kramatorsk, according to
Bloomberg.
The crisis in Ukraine appears to have hurt investor confidence
in Germany, Europe's largest economy, said the Center for European
Economic Research, or Zew institute on Tuesday. Its six-month
expectation index in April reached 43.2, falling from 46.6 in
March, marking the fourth-consecutive month of declining
confidence. Analysts polled by The Wall Street Journal were looking
for an April reading of 45.0.
Momentum picked up in Germany's economy at the start of the
year, but the "cautious expectations in this month's survey are
likely to be caused by the Ukraine conflict, which still creates
uncertainty," said the ZEW institute.
German stocks, as gauged by the DAX 30 index fell further as the
session headed toward the close, and finished down by 1.8% at
9,173.71. Russia's blue-chips MICEX index lost 2.5% to settle at
1,311.01, and Russia's RTS index was shoved 3.1% lower to
1,141.96.
The U.K.'s FTSE 100 fell 0.6% to 6,541.61, and France's CAC 40
gave up gains, closing down 0.9% at 4,345.35.
Among individual movers, L'Oreal SA rose 1.1%, adding to
Monday's climb of 2.8% after the cosmetics firm forecast a rise in
sales and profit this year. Its revenue for the first quarter fell
2.2% on a year-over-year basis, dented by weak currencies in its
markets.
Nestlé SA shares reversed gains and slipped 0.2%, with the food
producer saying first-quarter sales fell 5.1% on weakness in two
key regions and a strong Swiss franc. Drug maker Roche Holding AG
also flagged the impact of the strong Swiss currency, posting a 1%
decline in first-quarter revenue as it hurt the value of growing
sales of Roche's cancer drugs. Excluding the currency impact, sales
rose 5%. Roche shares fell 0.4%.
Imperial Tobacco Group tacked on 0.3% after the British company
said 900 jobs will be lost as part of its restructuring effort.
But shares of Banca Monte dei Paschi di Siena SpA stood out as
the worst performer on the Stoxx 600 by stumbling 10.4%. The
struggling Italian lender is considering raising up to 5 billion
euros ($6.91 billion) in a share sale, more than the 3 billion
euros it previously planned to raise. The company needs to repay a
government loan of EUR4.1 billion, and if the share sale doesn't
occur this year, the bank faces nationalization.
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