Russian markets clouds mount over Euro summit

Russian equities have been sold off heavily in morning trade on increasing concern that Euro leaders will prove unable to agree on an economic growth strategy at their Wednesday evening Summit, or on measures to further buttress Greece. At 11.30.a.m. in Moscow the ruble-denominated MICEX was down 1.24 percent to 1284, below the psychologically important 1300 mark, with the dollar-denominated RTS lost 1.66 percent to 1299. A key driver for Russian indices have been further falls in crude prices with Brent down as low as $107.55/bbl. The Moscow falls followed on from a wave of selling across Asian markets on Wednesday, with the Nikkei losing 1.98 percent, the Hang Seng 1.33 percent and the Shanghai Shenzen down 0.41 percent. Elsewhere Australia shed 1.31 percent and Singapore 1.33 percent. In Europe morning trade saw the FTSE 100 down 1.27 percent, the DAX in Frankfurt down 1.28 percent, the CAC in Paris down 1.24 percent. Overnight in the United States markets were little moved, despite comments by former Greek Prime Minister Lucas Papademos in an interview with the Wall Street Journal which were interpreted as meaning that preparations were being made for a Greek exit of the Eurozone. Speaking to Dow Jones, Papademos said: “Although such a scenario is unlikely to materialize and it is not desirable either for Greece or for other countries, it can not be excluded that preparations are being made to contain the potential consequences of a Greek euro exit.” That immediately triggered a sell-off, with global investors increasingly uncertain about what effect on the global financial system a Greek Euro exit could have, as well as about the implication for other embattled and indebted Eurozone sovereigns. Also weighing on investor confidence are comments from the German press that Chancellor Angela Merkel is unlikely to agree with other European leaders on Wednesday night that there is a need to ease back on austerity measures across Europe and a renewed focus on economic growth.