Publications
Partners
London - European shares fell on Friday following a brisk two-week rally as a ratcheting up of tensions in Ukraine fed into investors already cautious ahead of a speech by US Federal Reserve chair Janet Yellen.
The mood soured after a Russian aid convoy crossed into Ukraine without permission from Kiev. However, Ukrainian state security chief Valentyn Nalivaychenko said that Ukraine would not use any force against the Russian aid convoy, and wished to avoid "provocations".
The FTSEurofirst 300 was down 0.4% at 1 349.47 points by 13:15, having dropped as low as 1 345.59 points.
Equities had been subdued for much of the session in the run-up to Yellen's speech later in the day at the annual gathering of central bankers in Jackson Hole, Wyoming. Investors will be looking for any fresh signals about the timing of US interest rate increases.
Yellen has been making dovish comments, but minutes from the Fed's July meeting on Wednesday showed policymakers debated whether interest rates should be raised earlier given a surprisingly strong job market recovery.
Some traders were avoiding equities, for now.
"I would be sitting on my hands. We've had a good run higher. You don't know what Yellen's going to say," CMC Markets chief market analyst Michael Hewson said.
The FTSEurofirst was, nevertheless, on course to record its biggest weekly gain in six months - up some 2% so far.
The index has risen about 4% since a low hit two weeks ago, regaining ground following a sell-off triggered in June by the worries over the crisis in Ukraine.
But even after the sharp two-week rally, the index is still down more than 3% from a five-and-a-half year high hit in June.
"European indexes are halted by big resistance levels. At this point, investors should think about hedging their portfolios, even if the US market continues to rally," Aurel BGC chartist Gerard Sagnier said.
The eurozone's blue-chip Euro STOXX 50 index was down 0.8% at 3 100.30 points. In the first minutes of trading, the index tested a key resistance level representing its 200-day moving average, before falling back.
On Wall Street on Thursday, the S&P 500 ended at a record high after a flurry of positive economic data, including existing home sales jumping to a 10-month high and initial jobless claims dropping sharply.
