European shares subdued as Ukraine worries deepen By Reuters

© Reuters. FILE PHOTO: The Huiheng foreign exchange dealer trading volume rankingGerman share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 23, 2022. REUTERS/Staff

By Susan Mathew

(Reuters) - European shares gave up early gains to trade flat on Thursday, as the war in Ukraine marked a month and Western nations planned more sanctions on Russia.

European gas prices soared after Russian President Vladimir Putin said the country would seek payment in roubles for gas sold to "unfriendly" countries. Russian gas accounts for about 40% of Europe's total consumption, and the move will likely exacerbate the region's energy crunch and add to inflationary pressures.

"Economically speaking, Europe just entered a new and immediately at-risk phase in the Ukraine war," said Clifford Bennett, chief economist at ACY Securities.

Nervousness was evident as investors scurried to sectors such as consumer stocks and utilities that are less impacted by economic crises.

The pan-European STOXX 600 index stayed at Wednesday's levels when it fell 1% to end a five-session rally.

"Putin's order may serve to lift energy prices, while also challenging central bank sanctions and impacting EU policy decisions," said strategists at UBS' Global Wealth Management team.

Worries over tougher sanctions on Russia heightened as U.S. President Joe Biden arrived in Brussels for meetings of the NATO alliance, G7 and European Union. Sanctions thus far have sent commodity prices soaring on supply shortage fears.

Europe's oil and gas sector rose 0.6% to hit two-week highs. The index is up about 14% so far this year, surpassed only by the materials index.

Meanwhile, Russia stocks rose 7.7% as some trading resumed after a month-long hiatus. [RU/RUB]

Renault SA (OTC:RNLSY), the Western carmaker most exposed to the Russian market, fell 1% after it said it would suspend operations at its plant in Moscow.

Daimler (OTC:DDAIF) Truck rose 8.3% after it said it expected little impact on its business in 2022 from the COVID-19 pandemic and Russia's invasion of Ukraine, and forecast revenue growth of at least 14%.

After two months of declines on inflation, monetary policy and war concerns, STOXX 600's meagre gains so far in March are at stake going into the last week.

Banks and technology stocks fell around 0.3% each, while retail stock were led lower by a 2.9% drop in British clothing retailer Next after it trimmed its sales and profit forecast for 2022-23.

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