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File photo of demonstrators with Ukrainian flag and EU flag. The EU reached an outline agreement on Friday on its first economic sanctions on Russia. (Markus Schreiber/AP)
File photo of demonstrators with Ukrainian flag and EU flag. The EU reached an outline agreement on Friday on its first economic sanctions on Russia. (Markus Schreiber/AP)

Premarket: Europe subdued, Russia shares tumble on new sanctions Add to ...

The euro was stuck near its lowest level since November and Russian shares tumbled for a third straight day on Monday as new European sanctions for Moscow chilled the already frosty relationship between the two.

The 28-nation EU reached an outline agreement on Friday on its first economic sanctions on Russia, which said the moves would hamper co-operation between the two and undermine the fight against terrorism.

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Having suffered on Friday, Europe’s main bourses were again subdued. There was more pain for Russian stocks after a report that shareholders in defunct oil producer Yukos had won a $50-billion international court case against Russia.

Moscow’s dollar-denominated RTS index was down 1.6 per cent, its ruble-traded peer MICEX traded 0.9 per cent lower, and the ruble was down 0.5 per cent against the dollar to trade at 35.32.

“While the suit has been pending since 2007, any judgment will likely be read as a sort of barometer on Europe’s view of Russia at present,” analysts at Sberbank Investment Research said in a note.

Some early traction for the FTSEurofirst 300 quickly faded to leave the index of top European shares flat at 1,371.40 points, after losing 0.7 per cent on Friday.

The nerves over Ukraine and Russia were partially offset by a small number of positive company updates and after the latest rise in Chinese shares had helped Asian markets hit a new three year-high.

There was little movement among the major currencies in early deals.

The combination of the tensions with Russia – one of the euro zone’s big trading partners and energy suppliers – and what looks to be a now strengthening dollar, kept the euro pinned at an eight-month low of $1.3430. The dollar was also at a six-month high against a basket of currencies.

FED FOCUS

Analysts and traders are ready for a busy week of U.S.-focused action including a Federal Reserve meeting and GDP data on Wednesday and non-farm payrolls figures on Friday.

“We think the euro-dollar move may pause for breath at the start of this week before another shift lower at the end of the week,” said Adam Myers, head of European currency strategy at Credit Agricole in London.

“The market is clearly short on the euro but there doesn’t quite seem to be the fuel over the next day or two to drive it much lower and that may squeeze some of those positions.”

In commodities, Brent crude slipped below $108 a barrel as fighting between Israel and Hamas Islamist militants subsided in Gaza, although the tense situations there as well as in Libya, eastern Ukraine and Iraq all limited the fall.

Brent shed 57 cents to $107.82 a barrel after a 1 per cent gain last week. Gold also slipped under pressure from the stronger dollar but was supported near $1,300 an ounce by its safe-haven appeal.

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