FTSE 100 drops as investors flee European stock markets over Russia-Ukraine fears

Investors are fleeing the FTSE 100 and wider European stock markets for safe haven assets today amid fears of a fresh escalation in Russia’s war in Ukraine.

Markets have been spooked by Vladimir Putin’s move to approve an updated Russian nuclear doctrine, which could pave the way for the Kremlin to consider using nuclear weapons if it is subject to a missile attack supported by a nuclear power.

While the doctrine has reportedly been in the works for some months, the decision to finalise the plans followed the first attack on Russian territory by Ukraine with US-made missiles.

The developments have triggered a flight toward assets like gold and sparked falls across global markets.

The FTSE 100 has tumbled 0.4 per cent this morning while the more domestically focused FTSE 250 slid around 0.3 per cent. The Eurostoxx 600, made up of Europe’s biggest companies, slid nearly 0.9 per cent in the morning session.

Gold, typically seen as a haven for investors amid times of volatility, climbed to a two-week high of £2,085 per ounce.

“News of Ukraine utilising its new ability to hit Russia with US missiles has prompted a sharp turn lower for stocks, while the dollar and gold have both risen on safe haven buying,” said Chris Beauchamp, chief market analyst at online trading platform IG.

“While likely more sabre rattling from the Kremlin, it does take the world closer to a terrifying miscalculation. 

“Gains in indices have been wiped out, and investors are once again turning cautious on fears of further escalation” he added.

Andrea Tueni, head of sales trading at Saxo Banque France, told Bloomberg the market reaction is “logical” after days of tension. 

“For the moment the market reaction is contained, some are still in a wait-and see-mode,” he added.

The jitters have pushed European stocks to fresh lows after weeks of fears over Donald Trump’s trade policy. 

Potentially punitive US tariffs for European firms have fuelled a slide in stocks in recent weeks, with the Eurostoxx 600 down around 1.7 per cent since Trump’s victory.