(MENAFN- AFP) European stocks closed lower on Friday, giving up earlier solid gains after news that Ukrainian artillery had destroyed part of a Russian military column spooked investors.
In Frankfurt, the DAX tumbled 1.44 percent to 9,092.60, while in Paris the CAC 40 slid 0.74 percent to 4,174.36 points.
London's benchmark FTSE 100 index ended just above the flatline at 6,689.08 points, compared with Thursday's close.
"A feeling of complacency had been creeping back into investor psychology this week with a general feeling that perhaps the declines at the start of the month were overdone," said Jasper Lawler at CMC Markets.
"The encounter in Ukraine was a hefty reminder that geopolitics cannot be ignored."
Equity markets turned lower after Ukrainian President Petro Poroshenko said that Kiev had shelled and destroyed part of a Russian armed convoy as it crossed into eastern Ukraine.
European leaders hit out at Russia, with Brussels urging Russia to put an "immediate stop" to all forms of hostilities near the Ukrainian border and Britain summoning Moscow's envoy.
The Kremlin hit back, warning to Kiev not to interfere with a convoy of vehicles it deployed to carry humanitarian aid to eastern Ukraine areas controlled by pro-Moscow secessionists.
News of the rising tensions in Ukraine sent investors running for the safe havens of European bonds, sending the yields on German and French state debt to new record lows.
It also hit US shares, which had posted two straight days of gains as investors shrugged off geopolitical tensions over signs the US economy continued to grow.
In mid-afternoon trading, the Dow Jones Industrial Average was down 0.38 percent to 16,650.58.
The broad-based S&P 500 lost 0.39 percent at 1,947.62, while the tech-rich Nasdaq Composite Index fell 0.13 percent to 4,477.11.
Oil prices gained in New York on the news as traders fretted about an interruption in supplies from Russia, the world's second-largest oil producer.
- Euro gains -
In foreign exchange trade Friday, the euro rose to $1.3389 from $1.3365 late on Thursday in New York.
The European single currency climbed to 80.22 pence from 80.09 pence on Thursday, while the pound rose to $1.6690 from $1.6686.
In corporate news, shares in mining giant BNP Billiton closed up 1.21 percent after it said it could spin-off unwanted assets to focus on top tier commodities such as iron ore, copper, coal and petroleum.
Shares in the world's second-largest platinum producer Impala Platinum fell more than 1.0 percent after it warned a five-month strike could slash its full-year earnings by up to 75 percent.
In economic news, Britain's output expanded by 0.8 percent in the second quarter of 2014 compared with output in the first three months of the year, official data showed on Friday.
Gross domestic product (GDP) grew by 3.2 percent in the April-June period compared with the second quarter of 2013, the strongest growth since mid-2007.
Rob Wood, an economist at Berenberg, said growth "could well get more lopsided in the near term" as events in Ukraine hit demand for exported goods while domestic demand expands rapidly.
The upbeat British data stands in contrast to the 18-country eurozone, where growth ground to a halt in the second quarter dragged down by top economies France and Germany, official data showed on Thursday.
European stock markets had risen on Thursday as data fuelled speculation that the European Central Bank would be forced to roll out stimulus measures.
"Bad news has resumed its position as the familiar rather than the rare story," said Capital Spreads dealer Jonathan Sudaria.
"Fears of a European recession and deflationary slump have been welcomed by markets" because of the prospect of a new ECB stimulus programme, he said.
Asian stock markets closed higher on Friday, tracking Wall Street gains overnight, as traders shrugged off news of a rise in initial claims for US unemployment insurance benefits.
On the London Bullion Market, the price of gold fell to $1,296 an ounce from $1,313.50 on Thursday.
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