A Russian troop build-up on the border with Ukraine caused nervous investors in Europe to hit the sell button for shares on Wednesday, shifting their money into bonds.
Lower German industrial orders and Italy’s economy unexpectedly sliding back into recession did not help.
The EuroStoxx50 index of the top 50 shares finished the session down 0.62 percent.
The Kremlin waited until trading was almost over in Europe before announcing plans for bans or limits on agricultural products from countries which have issued sanctions against Russia.
A further souring of relations between Moscow and the West could hurt the European economy, already struggling to recover from a deep recession.
Barclays Market Analyst Will Hobbs cautioned: “There’s almost unlimited downside and very, very little upside from any further escalation of this conflict from both sides. However, the large paramilitary presence on both sides does indicate that there’s room for a mis-step and there’s room for this to broaden out accidentally almost.”
In Moscow, the dollar and rouble denominated indexes fell and Russia’s top bank Sberbank, which was sanctioned by the European Union last week and is seen as a barometer for the wider Russian economy, lost 3.6 percent.
Portugal’s main bourse was the region’s worst performer. It dropped 4.08 percent to hit its lowest level in over a year, with financial stocks suffering over concerns about fallout from a rescue plan for ailing Banco Espirito Santo.
The euro came under pressure, hitting a nine-month low of $1.331 against the dollar at one stage.