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Europe Markets: European stocks close with worst week since March 2020 and euro plunges to 2-year low as Russia-Ukraine war worries build

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Investors were dumping European stocks and the euro currency on Friday, amid increasing anxiety over an intensifying war in Ukraine, as Bank of America said the most money ever flowed out the region over the last week.

The Stoxx Europe 600 index
SXXP,
-2.60%

fell nearly 3% to 424.44, and has lost more than 5% since Russia’s invasion of Ukraine began just over a week ago. The index is facing a weekly decline of more than 6%, which would be the biggest such loss since the start of the pandemic in early 2020 if it holds.

The German DAX
DAX,
-3.07%

and French CAC 40
PX1,
-3.41%

were down 3.6% each, while the FTSE 100 index
UKX,
-3.09%

was down 3.4%. The DAX was set for a drop of more than 9% this week, which would mark its worst weekly decline since March 2020.

The euro
EURUSD,
-1.26%

was getting battered, down 0.9% to $1.09305, a level not seen since May 2020, as investors flocked to the U.S. dollar
DXY,
+0.86%
,
gold
GC00,
+0.50%

and government bonds. The yield on the 10-year bund
TMBMKDE-10Y,
-0.035%

fell 3 basis points to negative 0.54%.

Already nervous investors woke to news of a fire at a training building at Europe’s biggest nuclear plant in Ukraine, as fighting raged for a ninth day.

According to Associated Press reports, the nuclear power plant in the southern Ukrainian city of Enerhodar had been shelled by Russian troops, sparking a fire at the facility. The plant reportedly has six reactors, and three had been offline before the attack.

Ukrainian state emergency services later said on Facebook
FB,
-2.47%

that the fire had had been contained, while the regional military service said early measurements showed radiation was “unchanged” and posed no danger to the population. The power plant is now being controlled by Russian troops.

“The incident raised concerns that the conflict could become even more dangerous, even after both sides have agreed to set up humanitarian corridors,” said Charalambos Pissouros, head of research at JFD, in a note to clients.

“We stick to our guns and we repeat for the umpteenth time that it is too early to assume that the worst is over. Even following the aforementioned agreement, Russian forces continued surrounding and bombarding Ukrainian cities, with the conflict entering its second week,” said Pissouros.

“Thus, we still believe that the path of least resistance for equities, the euro, and the pound, is to the downside,” with commodities and safe havens such as the yen and franc staying supported, he said.

Bank of America said Friday that $6.7 billion flowed out of Europe over the last week, the most on record. Any March de-escalation of the Russia-Ukraine conflict will likely cause a “big bear rally in risk assets but we say sell-the-rip as Fed/ECB is now hopelessly trapped between Wall St deflation & Main St inflation,” said strategists.

Uncredited

U.S. stock futures
ES00,
-0.84%

remained deep in the red early Friday, though off overnight lows, following the nuclear plant fire, with the February employment data coming ahead of the stock market open.

Nearly every stock sector in Europe was under pressure, with banks leading the way south. HSBC
HSBC,
-2.35%

HSBA,
-4.27%

shares slid 3% and Deutsche Bank
DB,
-3.71%

DBK,
-6.81%

shares tumbled 7%. Heavily weighted energy names such as Shell
SHEL,
-3.54%

SHEL,
-5.99%
,
TotalEnergies
TTE,
-3.08%

TTE,
-4.41%

and BP
BP,
-4.55%

BP,
-3.28%

remained elevated Friday.

Airlines and auto makers were also hard hit, with Deutsche Lufthansa
LHA,
-4.54%

and Wizz Air
WIZZ,
-7.57%

falling more than 7% each and Volkswagen
VOW3,
-4.94%

down 5%.

Russia’s stock market was shut for a fifth day on Friday and will stay closed at least through March 8, the central bank announced. The country has been hammered by sanctions as punishment for its invasion of Ukraine. The London Stock Exchange on Friday announced the suspension of more Russian companies with secondary listings.

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