Market chaos as war fears mount

 
Tim Wallace
Follow Tim
World leaders compare Russia’s threat to Ukraine to Soviet era tactics

WORLD leaders last night condemned Russia’s invasion of Ukraine, demanding that troops pull out of the country and leave its politicians to organise new elections in peace.

The crisis hit home in the City as investors fled shares of firms exposed to Russia and Ukraine, while Russian markets tumbled, the rouble dived and new fears emerged that British petrol prices could jump on the turmoil.

Britain, America and the EU agreed to exclude Russia from the world’s top table, boycotting the planned G8 meeting in Sochi.

And ambassadors to the United Nations ramped up the rhetoric against Russia, comparing the military presence in Crimea to Soviet-era attacks on Czechoslovakia after the Prague Spring of 1968.

However, no military action is expected and even economic sanctions are set to be very limited – a briefing note seen entering Downing Street yesterday showed Britain aiming to steer clear of erecting trade barriers.

Russia too increased the tension, issuing an ultimatum to Ukrainian forces in the Crimea region, reportedly telling soldiers and sailors to surrender.

Russia’s ambassador argued its actions were necessary to protect ethnic Russians in Ukraine, and said it had moved forces into Crimea at the urging of ousted Ukrainian President Victor Yanukovich.

Britain’s ambassador to the UN called this a “trumped up pretext” to invade, and praised the Ukrainian authorities for “refusing to rise to provocation.”

“These are only excuses which even those voicing them cannot believe, they are so crude,” France’s ambassador told the UN Security Council.

“This is simply brutality and propaganda. France is not one to play this ridiculous game which does not serve the interests of anyone, least of all the Ukrainian and Russian people.”

The US representative said: “Russia’s provocative actions could easily push a tense situation beyond the breaking point.”

Russian markets tumbled on the heightened crisis.

Moscow’s Micex stock index dived 10.8 per cent on the day and the rouble fell two per cent against the dollar.

Despite oil prices rising 2.2 per cent, BP’s shares fell 2.28 per cent yesterday – the British firm owns almost 20 per cent of Russian oil giant OAO Rosneft, where shares dropped 4.14 per cent on the crisis in Ukraine.

ITE Group, which organises trade exhibitions in the Russia, was the second biggest faller on the FTSE after plunging over 13 per cent. Iron ore miner Ferrexpo, the first Ukrainian company ever to list in London, also fell by 7.6 per cent.

The chaos may soon move from the markets to the high street, with the RAC warning British drivers could see petrol prices rise by 5p per litre as a result.

The uncertainty could send a litre of petrol up to around 135p, reversing half of the falls seen in the past year, the motoring group said.

-11% Wiped off Russia’s Micex index

-1.49% FTSE 100 closes at two-week low

Related articles