European stocks drop as Ukraine crisis flares up

European stock markets sank on Thursday as investors worried over reports of increased Russian interference in war-torn Ukraine, dealers said.

In late morning deals, London’s benchmark FTSE 100 index dropped 0.22 percent to 6,815.74 points and the Paris CAC 40 lost 0.45 percent to 4,375.33 compared with Wednesday’s close.

Frankfurt’s DAX 30 index shed 0.68 percent to 9,504.02 points, hit also as data showed German unemployment rose by 2,000 in August, dashing expectations for a decline of about 5,000.

“The stand-off between Russia and Ukraine has flared up once again with reports coming out of Kiev suggesting fresh military incursions across the border,” said analyst Tony Cross at trading firm Trustnet Direct.

“Globally we?re seeing some signs of risk aversion as a result, with gold edging higher,” he added.

The price of gold — widely considered a safe-haven investment — advanced to $1,288.52 an ounce, from $1,282.75 on Wednesday on the London Bullion Market.

– Russia ‘involved in Ukraine’ –

The United States accused Russia on Thursday of being “directly involved” in fighting in conflict-hit east Ukraine, after rebels appeared to seize swathes of territory from retreating government forces.

Ukraine has asked NATO for help.

“Keeping recent bullish sentiment in check is the blatant Russian-led offensive in Ukraine,” added Capital Spreads analyst Jonathan Sudaria.

There has been increasing concern in Kiev and the West that Russia is sending troops into eastern Ukraine, although Moscow has repeatedly denied the allegations.

European stock markets had traded mixed on Wednesday, as investors paused after recent gains won on hopes of quantitative easing stimulus measures from the European Central bank.

In foreign exchange activity on Thursday, the European single currency rose to $1.3207 from $1.3195 late in New York on Wednesday.

The euro eased to 79.58 pence from 79.59 pence late in New York on Wednesday, while the pound rose to $1.6594 from $1.6576.

– Asia mixed before data –

Asia’s markets mostly fell on Thursday, with investors unable to build on recent advances on the eve of key US second-quarter economic growth data.

Tokyo fell 0.48 percent, Sydney lost 0.47 percent, Shanghai gave up 0.62 percent and Hong Kong lost 0.71 percent, while Seoul finished on a flat note.

Global markets are however on a general uptrend as the US economy shows regular signs of getting back on track, in turn sending New York stocks to record highs.

Wall Street shares ended little-changed in light trading on Wednesday, one day after the S&P 500 index closed above the 2,000 milestone for the first time.

The Dow Jones Industrial Average edged up 0.09 percent and the S&P gained 0.10 points to stand at 2,000.12 points, while the tech-rich Nasdaq Composite fell by just 0.02 percent.