World shares subdued amid reports of Russian sanctions

AP and AFP

TOKYO/HONG KONG–World shares were rattled Thursday by reports the European Union is weighing stiffer financial sanctions against Russia. A further pickup in China’s manufacturing in July failed to lift markets which have been unnerved the past week by Israel’s invasion of Gaza and the shooting down of a civilian jetliner over a part of eastern Ukraine controlled by pro-Russian separatists. The Financial Times said EU diplomats are considering new sanctions against Russia, including a proposal to ban Europeans from purchasing new debt or stock issued by Russia’s largest banks. The report cited a memo prepared by the European Commission. The downing of the Malaysia Airlines jet, killing all 298 people on board, as heightened tensions between Russia and the West. European markets opened lower, with Britain’s FTSE 100 slipping 0.4 percent to 6,774.13. France’s CAC 40 dropped 0.5 percent to 4,356 and Germany’s DAX shed 0.6 percent to 9,697.87. Wall Street appeared poised for losses. Dow futures and broader S&P 500 futures were both 0.1 percent lower. Asian markets mostly rose Thursday as concerns over the Ukraine crisis eased. Shanghai rallied 1.28 percent, or 26.57 points, to 2,105.06 and Hong Kong jumped 0.71 percent, or 169.63 points, to 24,141.50. Sydney recorded its seventh straight gain, rising 0.20 percent, or 11.1 points, to close at 5587.8. But Tokyo slipped 0.29 percent, or 44.14 points, to 15,284.42 and Seoul ended marginally lower, dipping 1.70 points to end at 2,026.62. Banking giant HSBC said its preliminary purchasing managers index of manufacturing activity for this month jumped to 52.0 from a final reading of 50.7 in June. The result suggests a recent slate of small stimulus measures by the government is gaining traction. Anything above 50 points to growth and a number below suggests contraction in the Asian economic giant and key driver of regional and global growth. “Economic activity continues to improve in July, suggesting that the cumulative impact of mini-stimulus measures introduced earlier is still filtering through,” HSBC economist Qu Hongbin said in a statement.

“We expect policy makers to maintain their accommodative stance over the next few months to consolidate the recovery.” Euro Suffers Fresh Selling The news helped support an uptrend in markets as they recover from Friday’s losses that were fuelled by the downing of MH17 in Ukraine. The tragedy, which killed almost 300 people, has been blamed by the United States on pro-Russian rebels fighting the Ukraine government, raising the prospect of an international crisis.