European shares sink as geopolitical headwinds leave investors wary

Stocks have dropped almost 2% this week amid rising Russia-Ukraine tensions

European shares ended lower on Friday and dropped nearly 2 per cent this week with travel and banking shares leading the declines over caution around rising tensions between Russia and Ukraine ahead of the weekend.

Caution overtook markets across the globe as Russian-backed separatists in eastern Ukraine said they planned to evacuate their breakaway region’s residents to Russia, a shock turn in a conflict the West believes Moscow plans to use to justify an invasion of Ukraine.

Dublin

The Iseq fell 1.4 per cent in line with the downbeat sentiment among investors across European markets. Ryanair followed Thursday's 3.5 per cent slip with a drop of 2.1 per cent, closing at €16.50.

Insulation-maker Kingspan fell 3.3 per cent to €88.38 on a day when it reported that revenues rose 42 per cent last year to €6.5 billion. The company said it was "cautiously optimistic" about the sales outlook for 2022, despite a slower fourth quarter, but said it was "mindful of the high bar in comparison with last year's performance".

Packaging group Smurfit Kappa rose 1.3 per cent to €48.77, while building materials heavyweight CRH dropped 1 per cent to €43.28.

The banks edged into the green, with Bank of Ireland up almost 0.8 per cent at €6.34 and AIB finishing 0.1 per cent higher at €2.60.

London

The FTSE 100 fell 0.3 per cent as weakness in healthcare stocks and simmering Russia-Ukraine tensions offset optimism around better-than-expected January retail sales data.

Oil majors Shell and BP were down 0.6 per cent and 1.6 per cent, respectively, tracking weaker crude.

Defensive stocks including consumer staples were the top performers as Reckitt Benckiser extended gains after posting strong results on Thursday and Guinness-maker Diageo and Imperial Brands rose nearly 1 per cent each.

GSK fell 0.8 per cent after the drugmaker paused a late-stage trial of its vaccine candidate against the respiratory syncytial virus (RSV) in pregnant women.

Taxpayer-backed bank NatWest fell 2.4 per cent after warning that rising prices would make it harder to cut overheads.

Europe

The pan-European Stoxx 600 index fell 0.8 per cent on Friday and dropped 1.9 per cent for the week, with travel and banking shares the top weekly losers. In Frankfurt, the Dax fell 1.5 per cent, while the Cac 40 dropped 0.25 per cent in Paris.

Allianz fell 3.8 per cent and was the top drag on the Stoxx 600 after it announced big bonus cuts for its chief executive and board, and a settlement with a "vast majority" of investors, as it braces for the outcome of US regulatory investigations into a multibillion-dollar trading debacle at its funds arm.

Meanwhile, Finnish drug manufacturer Orion jumped 22.2 per cent following positive trial results for its prostate cancer treatment.

Luxury group Hermes fell 4.1 per cent after its fourth-quarter sales grew a touch below market expectations and self-imposed production caps meant the group could not keep up with demand for its handbags.

Power utility EDF slipped 2.4 per cent after announcing a rights issue, which it said will raise an approximate total of €2.5 billion.

US

Wall Street indices slumped on Friday as escalating tensions in Ukraine amid fears of an imminent Russian invasion prompted investors to dump risky assets in the run-up to a long weekend. All the major S&P 500 sectors were in the red, with energy shares leading losses due to weaker oil prices.

Big banks declined and as did mega-cap growth stocks including Amazon. com, Google parent Alphabet and Tesla.

Intel slipped 5.9 per cent after the chipmaker forecast its profit margin to drop this year and then be steady for several years as it invests in new technologies and factories to meet rising chip demand.

Roku tumbled 24.2 per cent after the streaming platform's disappointing quarterly revenue and first-quarter outlook. – Additional reporting: Reuters