Yahoo Finance European markets tumble as Russian forces seize Ukrainian nuclear plant
European stock markets continued their slide on Friday after reports that Russia had taken control of Europe's largest nuclear power station in Ukraine.
In London, the FTSE 100 (^FTSE) ended 3.2% lower on the day, while the CAC (^FCHI) tumbled 4.5% in Paris and the Frankfurt DAX (^GDAXI) was 4% down.
This followed earlier news of a fire at the plant, which heightened investor fears about the escalating conflict and sent oil prices higher.
A blaze broke out at the Zaporizhzhia nuclear plant in Ukraine as Russian forces mounted an attack on the city of Enerhodar, 550km south-east of Kyiv.
The fire was later put out and Ukrainian authorities said the reactors were safe. The International Atomic Energy Agency said it had not affected “essential” equipment.
The plant is the largest nuclear power plant in Europe and the ninth largest in the world.
Ukraine's president Volodymyr Zelensky said "if there is an explosion, it is the end of everything. The end of Europe," while Russia's defence ministry said the attack was caused by Ukrainian saboteurs.
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“Putting to one side that it takes a special kind of stupid to start firing on a nuclear power station, it’s doubly incomprehensible and reckless given Russia’s experience with Chernobyl nearby, and the potential impacts on Russia itself, as well as Europe, from any potential fallout,” Michael Hewson of CMC Markets said.
“The environmental damage in that region alone has rendered the agricultural land there unusable for years, and further damage from another nuclear meltdown would be catastrophic.
“Early reports suggest the fire is under control but as an indication of the lengths Russia will go to achieve its goals, it’s an even more worrying development, sending wheat and corn prices soaring.”
It also comes as the London Stock Exchange (LSEG.L) has expanded its trading ban on Russia-linked stocks, suspending a further eight. On Thursday it blocked trading in 27 companies.
The LSE said there'd been "ongoing deterioration" of market conditions since 2 March, adding it would continue to keep the situation under review.
Read more: London Stock Exchange blocks 27 companies with Russian ties
Across the pond, the S&P 500 (^GSPC) dipped 1.5% at the the time of the European close, and the tech-heavy Nasdaq (^IXIC) fell 1.9%. The Dow Jones (^DJI) edged 1.2% lower.
The dollar jumped to its highest level since 2020 as the war continues to send investors fleeing to safe-haven assets. However, the euro fell below $1.10 amid fears that sanctions against Moscow will send shockwaves through Europe's economy.
It came as Nonfarm payrolls surged 678,000 last month, above the 423,000 forecast, as the labour market pushed further towards maximum employment.
The unemployment rate edged down to 3.8%, and average hourly earnings were little changed from the prior month.
James Knightly, chief international economist at ING, said: "The US labour market continues to tighten with unemployment now firmly below 4%. Given strong hiring intentions, this will keep upward pressure on pay with the Federal Reserve set to respond with higher interest rates despite uncertainty created by Russia’s assault on Ukraine."
Watch: Fed warns Ukraine invasion will boost inflation
Jobs data on Thursday also showed that January saw a big jump in hiring to 467,000, above expectations of 125,000, while December was revised higher from 199,000 to 510,000.
This was as the US economy added more than 900,000 new jobs over the Christmas and New Year period.
Expectations are for another strong number of an average of 415,000 jobs to be added in February.
Asian stocks slumped overnight, with MSCI's broadest index of Asia-Pacific shares excluding Japan tumbling to the lowest level since November 2020, taking the year-to-date losses to 7%.
Stock markets were in a sea of red, with the Nikkei (^N225) in Japan losing 2.2% while the Hang Seng (^HSI) fell 2,5% in Hong Kong, and the Shanghai Composite (000001.SS) dipped 1%.
Meanwhile, the Moscow Exchange will remain closed for the fifth day on Friday, marking the longest market closure in the country's history. Officials said there will be no trading until at least next Wednesday in a bid to stave off financial collapse.
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