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European markets rise as Macron calls for Russia coal and oil ban over 'war crimes'

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European markets
European markets pushed higher on Monday as French president Emmanuel Macron called for further sanctions on Russian oil and gas imports. Photo: Jean Catuffe/Getty Images

European markets pushed higher on Monday as the European Union readies more sanctions against Russia amid reports of atrocities against civilians in Ukraine.

The FTSE 100 (^FTSE) notched up 0.4% as miners and house-builders lifted London's bluechip index, while France’s CAC (^FCHI) was 0.8% higher and the DAX (^GDAXI) rose 0.6% in Frankfurt.

French president Emmanuel Macron called for additional sanctions on Russia's coal and oil exports after mass graves were uncovered in the streets of Bucha, a town on the outskirts of Kyiv.

Meanwhile, Germany has resisted EU calls to ban Russian gas imports, which accounts for around 40% of European consumption.

Read more: How economic sanctions work

"We are dealing with a criminal war. It is clear we must end as quickly as possible all economic ties to Russia," said Christian Lindner, the country's finance minister. "We must plan tough sanctions, but gas cannot be substituted in the short term. We would inflict more damage on ourselves than on them."

It comes as Russian gas imports to the bloc hit the highest levels since the Ukraine conflict on Monday, with imports of Russian gas surging to a post-invasion high of 975.9 gigawatt hour (Gwh) a day, jumping from a level of 370 Gwh/day on the day before the invasion.

Ukrainian president Volodymyr Zelensky accused Russia of committing "war crimes" and European Council president Charles Michel said more embargoes were on "the way".

Oil prices shot up on Monday as a truce on the Saudi-Yemeni border reduced jitters over a supply shortage. The United Arab Emirates (UAE) and Iran-backed Houthi group announced they would halt military operations on the border.

Brent crude (BZ=F) rose 3.1% to $107.40 a barrel. US light crude (CL=F) was also 3.5% higher to $102.75 in electronic trading on the New York Mercantile Exchange at the time of writing.

"The new week has begun on a strong note, with stocks and oil moving higher, said Chris Beauchamp, chief market analyst at online trading platform IG. "A shaky start to the day has given way to more gains for indices, while expectations of stronger demand lift oil."

Brent crude was 3.1% higher to $107.62 a barrel in afternoon trade on Monday in London. Chart: Yahoo Finance UK
Brent crude was 3.1% higher to $107.62 a barrel in afternoon trade on Monday in London. Chart: Yahoo Finance UK

However analysts said that concerns over prices rising are unlikely to ease in the short term.

Michael Hewson, chief market analyst at CMC Markets, said: "This is mainly because of reports out of Ukraine at the weekend, where evidence of Russian atrocities and possible war crimes continue to come to light, making the bar for any type of peace accord, much more difficult to achieve.

"It’s hard to imagine Ukraine agreeing to anything that allows the Russians to walk away from answering for what has been uncovered outside Kyiv, especially now they seem to have the upper hand in pushing them back, while EU leaders look to mull the idea of additional sanctions against Russia as these new atrocities come to light."

Across the pond, US benchmarks were choppy on Monday as investors monitored the Ukraine war as president Joe Biden called for Russian president Vladimir Putin to be put on trial for war crimes.

Wall Street’s S&P 500 (^GSPC) advanced 18.84 points, or 0.4%, to 4564.70. The Dow Jones (^DJI) declined 0.1%. The tech-heavy Nasdaq (^IXIC) increased 1.4% after Twitter (TWTR) shares surged over 24% after Tesla (TSLA) CEO Elon Musk snapped up a 9.2% share in the social media platform, making him the biggest shareholder.

Read more: Bank of England's Bailey says crypto is the 'new frontline' for scams

Stocks were buoyed at the end of last week by a strong employment report that showed America’s jobless rate returning to pre-COVID levels. Friday’s job report showed the country added 431,000 jobs in March, slightly below expectations of 490,000, it also highlighted a revision to the February’s number, rising to 750,000 from 678,000. The unemployment rate fell to a two-year low to 3.6% from 3.8%.

In government bond markets, the yield on the two-year Treasury note closed above the 10-year note to its highest level since 2019. Typically, government bonds with longer terms offer higher yields. The move, called an inversion, is historically tracked as a predictor of a recession. The uptick in yields heightens expectations that the US Federal Reserve will continue on a hawkish path when it comes to raising rates in its next few meetings, as the central bank looks to tame market inflation expectations

"Unsurprisingly the strength of the number saw the US dollar, which had been languishing close to one-month lows, push sharply higher, along with short term yields as the US two-year yield rose over 12bps to its highest level in over three years, pushing it well above the 10-year yield, and in the process joining the 5-year yield in inverting above the 10-year yield," Hewson said.

Read more: Bank of England and UK city watchdog to probe nickel trading suspension

Overseas markets pushed higher overnight as markets were boosted by Chinese tech stocks jumping in Hong Kong and as China moved to resolve an audit dispute with the US. The MSCI’s broadest index of Asia-Pacific (AAXJ) shares excluding Japan was up 1.7%.

The Hang Seng (^HSI) led gains, rising 1.9% in Hong Kong as the City’s chief executive Carrie Lam announced on Monday that she will not be pursuing a second term in office. The Nikkei (^N225) edged 0.3% higher in Japan, and the Shanghai Composite (000001.SS) was closed in China for a holiday.

Watch: How does inflation affect interest rates?

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