By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- Russian stocks slid more than 2% Monday,
with the country facing the possibility of further sanctions
related to its conflict with Ukraine.
On track for a sixth day of losses, the MICEX Index fell 2.2% to
1,392.01. A close below the 1,400 would be the first in about two
months, according to FactSet data.
U.K. Prime Minister David Cameron is expected later Monday to
call on European leaders to impose sanctions against the Russian
oil, banking and defense industries if the government continues
supplying weapons and other support to pro-Russian rebels in
Ukraine, according to the Guardian newspaper.
The conflict between Ukraine and Russia intensified Thursday,
when Malaysia Airlines flight MH17 was shot down over eastern
Ukraine, killing all 298 passengers and crew on board. No one has
claimed responsibility for the incident, but U.S. officials over
the weekend leveled allegations at Russia of involvement in the
crash. International anger is growing over the inability of experts
to reach the crash site, with the Kremlin accused of not allowing
investigators unhindered access to the crash site as bodies of
victims languish in railcars.
The recent geopolitical tensions could play "a major part in the
dampening of demand as the diplomatic chill with Russia will no
doubt have economic ramifications for Germany," which is Europe's
largest economy, said Boris Schlossberg, managing director of FX
strategy at BK Asset Management, in a Monday note.
Germany's Bundesbank said Monday geopolitical concerns hurt
industrial output during the second quarter, in part leading
economic growth to stall during the period. The government's
preliminary GDP report is slated for release Aug. 14.
In Frankfurt, Germany's DAX 30 index fell 1.1% to 9,613. Only
shares of energy group E.On SE traded higher, by 0.1%.
Meanwhile, the Stoxx Europe 600 index fell 0.6% to 337.57.
Shares of Banco Espírito Santo fell 6% in the wake of Friday's
filing for creditor protection by its parent company, Portuguese
conglomerate Espírito Santo International SA. Banco Espírito has
said it will reimburse retail clients who invested in commercial
paper issued by ESI, according to The Wall Street Journal. Retail
clients held 255 million euros ($344.9 million) in ESI debt.
But shares of Tesco PLC outperformed the broader market, rising
1.4% after the U.K. grocer named a new chief executive officer and
as it warned trading conditions are "more challenging" than it
anticipated in its first-quarter interim statement in June.
Dave Lewis will join Tesco on Oct. 1, succeeding Philip Clarke,
who will exit the board, but continue to support the transition
until January 2015. Lewis currently serves as president of Unilever
PLC's personal care unit. Unilever shares were fractionally
higher.
"Incoming Dave Lewis appears to be a shrewd appointment with
successfully executed turnaround operations under his belt, as well
as stints in both the States and Asia -- territories Tesco have
struggled to crack," said Marc Kimsey, senior trader at Accendo
Markets, wrote Monday.
Shares of rivals Wm Morrison Supermarkets PLC fell 2.3% and J
Sainsbury PLC lost 1.8%, respectively.
The U.K.'s FTSE 100 index pulled back 0.5% to 6,718, with home
builders losing ground after property website Rightmove said house
prices fell 0.8% in July from June, marking the first fall in
prices this year. Shares of Barratt Developments PLC fell 2.6%,
Persimmon PLC dropped 2.4%, and property developers British Land
Co. shed 1%.
Off the FTSE 100, Taylor Wimpey PLC fell 2.3% and Berkeley Group
Holdings PLC gave up 2.6%.
Rightmove still raised its 2014 forecast for prices, saying new
selling asking prices will increase 8% annually, the top end of its
original projection of prices increasing by 6% to 8%.
In Paris, the CAC 40 index lost 0.7% to 4,306.
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