LONDON, Feb 17 — Stocks fell today as investors took fright after Russian-backed separatists accused Ukraine government forces of opening fire, while traders sought safety in government bonds and oil clawed back some of its heavy early losses.

The Russian-backed separatists in eastern Ukraine accused government forces of opening fire on their territory four times in the past 24 hours and said they were trying to establish if anyone had been hurt or killed.

The incidents come as Russia has massed more than 100,000 troops close to Ukraine’s borders, raising fears of an invasion.

Losses on stock markets were widespread, though not as big as in recent sessions.

In Europe, the Euro STOXX slipped 0.2 per cent while Britain’s FTSE 100 dropped 0.7 per cent. Strong corporate earnings in Europe helped keep the losses in check.

Wall Street futures pointed to a lower open, although in Asia MSCI’s broadest index of Asia-Pacific shares eked out a 0.15 per cent rise.

The MSCI world equity index, which tracks shares in 50 countries, was slightly lower on the day.

Westpac analyst Sean Callow said markets were “clearly on edge” and vulnerable since a lot of traders had assumed tension was ebbing.

Investors sought safety in government bonds and yields on the US 10-year bond dropped more than 2 basis points to 2 per cent . There was also a fall in yields on the German 10-year government bond, the go-to safe-haven asset in the euro zone.

The Russia-Ukraine crisis is unnerving investors at a time when markets were already struggling because of concern that the pace of monetary policy tightening and the reduction in cheap cash will take some of the air out of highly valued share prices. Most major markets are down sharply in 2022, with the tech-heavy Nasdaq down by 12 per cent.

Some investors advised clients not to panic over the geopolitical crisis, however.

“Drawdowns driven by geopolitical stress events are typically short-lived for well-diversified portfolios,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

He added that their base case was a “relaxation of geopolitical tensions”.

Gold shines

Gold prices broke higher to hit an eight-month high of US$1,890 (RM7,914) an ounce, up 1.2 per cent on the session and helped by the broad nervousness across markets and worries about inflation.

Crude oil reversed some losses after earlier tumbling more than 2 per cent on optimism that negotiations will salvage Iran’s 2015 nuclear deal and bring more supply to a tight market.

By afternoon, US West Texas Intermediate (WTI) crude was down 1.2 per cent to US$92.46 a barrel, while Brent slid 1 per cent to US$93.80 a barrel.

Worries about a super-hawkish Fed rate-tightening campaign, potentially including a 50 basis-point hike next month, took a step down overnight after minutes of the latest policy meeting signaled a more measured, data-dependent approach from central bank officials.

The dollar was higher against most currencies but remains down marginally for the week. 

 - Reuters