Image source, Reuters

Image caption,

Soldiers examine the remains of a missile near Kyiv

Global markets rebounded as investor concerns eased about the severity of sanctions imposed on Russia following its invasion of Ukraine.

Coordinated Western sanctions against Russia have targeted its banks but left its energy sector largely untouched.

After sharp falls on Thursday, stock markets in the UK and Europe jumped more than 3%. US exchanges also rose.

Oil prices reversed early gains on Friday and fell by more than 2% but are still trading near seven-year highs.

Brent crude – the international benchmark for oil prices – dropped below $98 a barrel.

Stock markets in Europe and Asia rebounded from falls earlier in the week as investors assessed sanctions on Russia by the UK, the US, the EU and others.

While the sanctions against Russia include freezing bank assets and cutting off state-owned enterprises, they stopped short of disconnecting Russia from the Swift international banking system or targeting its oil and gas exports, which some analysts said had helped stock markets recover.

The UK’s FTSE 100 index rose 3.9% and stock markets in Germany and France closed more than 3.5% higher.

In the US, the Dow Jones Industrial Average and S&P 500 were up more than 2% at midday, while the Nasdaq was 1.3% higher, extending gains from Thursday.

On the London market, one of the top risers was Evraz, a mining firm with major operations in Russia and Ukraine. Billionaire Roman Abramovich owns a sizeable chunk of the company.

While shares in the company were up more than 17% on Friday, they have fallen 30% over the past five days.

After an earlier global sell-off of shares, investors are now “looking for bargains”, said Jane Foley, head of currency strategy at Rabobank.

Ms Foley told the BBC’s Today programme there were many firms in emerging markets which export agricultural products and raw materials such as metals, so “perhaps they’re going to be doing well in this crisis, because other countries will be looking to buy their commodities from other markets that aren’t Russian”.

Petrol prices

The UK imports 6% of its crude oil and 5% of its gas from Russia, but there have been concerns that sanctions could constrict supplies and drive up prices worldwide.

The high price of energy and fuel, with demand surging following the easing of Covid restrictions, is one of the main factors currently driving up the cost of living for people in the UK.

Both the RAC and AA motoring groups said average fuel prices hit fresh record highs of 149.67p a litre for petrol, with diesel at 153.05p.

Despite the fall on Friday, the AA predicted that petrol would hit 150p per litre over the weekend. There is a lag between crude oil and petrol price movements.

Image source, PA Media

Image caption,

Rising oil prices are hitting motorists

Both motoring groups said the weak pound combined with crude oil prices would push up costs at the pump.

RAC fuel spokesman Simon Williams said “sadly, more increases are on the way” due to the rise in the price of crude oil and the pound weakening against the dollar, “making wholesale fuel more expensive to buy for retailers in the UK”.

Gas prices have seen big fluctuations since Russia’s military action began.

UK wholesale gas prices soared nearly 60% on Thursday but on Friday prices were down more than 18%.

One expert described the market on Thursday as “like a cappuccino – the basic cost in terms of supply and demand is the coffee, with an awful lot of froth on top of it”.

Russia attacks Ukraine: More coverage

Russia is the second largest exporter of crude oil after Saudi Arabia. It is also the world’s biggest exporter of natural gas.

Europe gets nearly a third of its oil and around 40% of its gas from Russia, much of it flowing through pipelines across Ukrainian territory.

Concerns remain that sanctions could constrict supplies and drive up prices worldwide.

But countries imposing sanctions on Russia have not yet taken steps to disrupt Russia’s energy supplies, said Mansoor Mohi-uddin, chief economist at the Bank of Singapore.

“The situation remains highly fluid. As civilian casualties emerge, the pressure on the US, UK, European Union and Nato to help Ukraine defend its territory will increase,” he added.

Russian and Ukraine are also major global wheat suppliers, producing 29% of global exports, most of which travels through ports in the Black Sea.

The price of agreements to buy wheat shot up to a nine-year high on Thursday as Russia began its invasion. However, on Friday wheat prices were down 2%.

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