LONDON, Feb 26 — European stocks rose yesterday following Wall Street’s dramatic late rally, as investors welcomed coordinated Western sanctions against Russia that targeted its banks but left its energy sector largely untouched.

Oil prices initially fell back sharply but were back above US$100 a barrel in early European trading.

The jump in stocks was modest, however, and markets remained down significantly from levels at the start of the week after investors were left stunned by Russian President Vladimir Putin’s decision to invade Ukraine.

Yesterday, missiles pounded the Ukrainian capital as Russian forces pressed their advance.

By 0930 GMT, the Euro STOXX was 0.72 per cent higher while the FTSE 100 gained 1.1 per cent. Germany’s DAX nudged 0.05 per cent higher.

Asian shares closed up higher. But on Wall Street — where stocks staged a massive rebound after US President Joe Biden unveiled sanctions on Thursday — futures pointed to a lower open in the United States.

“Markets seem to be reducing tail risks. Additional sanctions announced against Russia matter to Russia, but the domestic Russian economy does not matter much to the global economy (and energy supplies are still flowing),” said Paul Donovan, chief economist at UBS Global Wealth Management.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan closed up 0.78 per cent, Shanghai’s composite index rallied 0.63 per cent and Japan’s Nikkei .N225 gained 1.95 per cent.

Russian stocks soared 14 per cent — but that followed one of the three biggest ever single-day stock market crashes in history.

Oil price

Oil prices started climbing again on worries about supply disruptions, with Brent crude rising 1.1 per cent to US$100.2 a barrel, while US West Texas Intermediate crude rose 0.46 per cent to US$93.29, although both benchmarks were off their highs.

Safe haven gold, which had jumped on Thursday, inched 0.35 per cent higher to US$1,909 an ounce after easing back from a multi-month high of US$1,973.96.

Reflecting the relative calm in financial markets, yields on 10-year US Treasuries was at 1.944 per cent after an initial slide to 1.84 per cent on Thursday, its biggest daily drop since late November.

After some dramatic moves in currency markets on Thursday, including more than 1 per cent falls in most European currencies, foreign exchange prices were much calmer.

The US dollar index, which measures the greenback against a basket of major currencies, was little changed at 97.185, having risen on Thursday to levels last seen during the first wave of the coronavirus pandemic.

The Russian rouble rose and was at 85.52 against the dollar, clawing back from a record low of 89.986.

With Russian troops pressing towards the Ukrainian capital and more casualties expected on both sides, many investors are bracing for a further ratcheting up of sanctions from the West.

“While US sanctions have so far been limited, given the escalation in Russian actions, there will inevitably be a more strident Western response in the coming days. European sanctions, on the other hand, have been more forceful, with Germany stopping approval of the Nord Stream 2 pipeline,” said Seema Shah, chief global strategist, Principal Global Investors.

“Although difficult, during a rapidly developing geopolitical conflict, investors are best suited to stay level-headed, considering that fundamentals are ultimately the driver of long-term investment returns.” — Reuters