A fresh round of U.S. sanctions once again ripped into Russia's
markets, with stocks and the ruble taking a hit.
The new restrictions, which target Russian state-controlled oil
giant OAO Rosneft and other top firms, follow weeks of U.S. threats
that Russia would face repercussions unless it helped defuse the
crisis in eastern Ukraine, where pro-Russia separatists have been
fighting the Ukrainian government for months.
Moscow's MICEX index slid 2.0%, with investors interpreting the
measures as more likely to hold back the Russian economy than
previous sanctions.
Rosneft fell 4.5%, while gas company Novatek--also a target of
the new sanctions--shed 4.0%.
The ruble fell 0.8% against the dollar to trade at 34.86, its
weakest level in six weeks. Against the euro, the ruble shed 1.1%
to 47.02 but was still far from its all-time low of 51.2 seen in
early March.
"The Russian economy had already slowed materially during the
first half of this year, and the new more biting economic sanctions
are likely to dampen investor expectations for an economic rebound
in the second half of this year," said Lee Hardman, a currency
analyst at Bank of Tokyo Mitsubishi UFJ.
The sanctions also cast a shadow over wider financial markets,
with investors pulling back from risky assets.
European shares fell, with the Stoxx Europe 600 index 0.6% lower
in early trade.
The Japanese yen, which is seen as a haven by investors and
typically rises in times of stress, added 0.2% against the dollar
to trade at Y101.48. Ultra-safe German government bonds climbed,
pushing 10-year yields down to 1.18%.
Gold, another safe harbor investment, climbed 0.5% to $1,305.70
an ounce.
Sanctions also hit Gazprombank, the bank connected with the
country's gas-export monopoly; and Vneshekonombank, or VEB, a
state-owned development lender that provided much of the backing
for the Sochi Olympics construction project.
The Treasury Department will now limit the sanctioned firms'
access to equity financing and medium- and long-term debt coming
from investors and lenders with ties to the U.S.
European leaders meeting in Brussels agreed to further sanctions
against Russia on Wednesday. The decision should allow for Europe
to cast its sanctions net wider, although the specific names to be
added their list have yet to be decided.
Write to Tommy Stubbington at tommy.stubbington@wsj.com and
Andrey Ostroukh at andrey.ostroukh@wsj.com
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