Russian Markets, Ruble Fall over Ukraine Crisis

W460

The Russian stock markets and the ruble fell in early trading on Monday after clashes between pro-Russian forces and the Kiev authorities in eastern Ukraine.

Western powers blame Russia for stirring up the trouble.

At about 0730 GMT, Moscow's benchmark MICEX, which is denominated in rubles, had fallen 1.08 percent and the RTS, which is denominated in dollars, had fallen 2.03 percent.

Shares in Gazprom energy giant had fallen 1.69 percent.

The Russian ruble fell both against the euro, which climbed 0.34 percent to 49.85 rubles, and against the dollar, which rose 0.36 percent to be worth 35.99 rubles.

"The headlines from east Ukraine over the weekend will unsettle markets at the start of trading today. The situation is clearly very dangerous and largely unpredictable," said Chris Weafer of Macro Advisory in Moscow.

The Ukrainian authorities have declared a full-scale military operation against pro-Kremlin forces in Russian-speaking eastern Ukraine.

NATO and Western powers have called for Russia to deescalate the situation but Moscow denies playing a role in the violence and says Ukraine is waging war against its own people.

The threat of economic sanctions from the European Union and the United States has already prompted a massive capital outflow from Russia of more than 50 billion dollars in the first three months of the year.

Last week the Russian government reduced its growth forecast for 2014 to between 0.5 percent and 1.1 percent, down from its previous forecast of 2.5 percent growth.

"The Russian economy is lingering on the edge of recession," VTB Capital investment bank wrote in a research note on Monday.

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