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European stocks slump at open; Frankfurt down 2.9%

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September 05, 2022: European stocks tumbled Monday after Russia indefinitely halted gas deliveries to Germany and effectively to Europe via a key pipeline, sending the euro plunging to a 20-year dollar low.

Frankfurt's DAX index dived 2.9 percent and the Paris CAC 40 shed 2.1 percent, while London's FTSE 100 dipped 0.9 percent before the announcement of Britain's next prime minister.

"European markets are plunging today as traders are worried about the ongoing energy crisis in Europe that could turn into a much bigger problem," AvaTrade analyst Naeem Aslam told AFP.

Russia's state gas giant Gazprom announced late Friday the key Nord Stream pipeline would remain shut indefinitely, blaming leaks.

The announcement came the same day as the G7 nations said they would work to quickly implement a price cap on Russian oil exports, a move that would starve the Kremlin of critical revenue for its war on Ukraine.

Resumption of deliveries via the pipeline, which runs from near Saint Petersburg to Germany under the Baltic Sea, had been due to resume on Saturday after what Gazprom had described as three days of maintenance work.

"Russia's ongoing weaponization of energy supplies continues to increase downside risks for European economies and the euro," said Lee Hardman, currency analyst at financial services group MUFG.

The news heightened long-running fears of a winter energy supply crunch, stoking recession worries and sending the euro reeling.

The unit sunk Monday below $0.99 to the lowest point since December 2002, despite expectations the European Central Bank will hike interest rates again Thursday to combat soaring inflation.

"The tumbling euro is sharply denting market sentiment, with the currency sliding despite expectations for a hawkish shift from the ECB on Thursday," noted Victoria Scholar, head of investment at Interactive Investor.


Posted on:2022-09-05T12:57:39+05:00