European Stocks Drop on Friday As Ukraine Crisis Heats Up

European stocks fell Friday as the United Nations was reportedly set to convene an emergency meeting about the worsening political crisis in Ukraine.

The Stoxx Europe 600 XX:SXXP -0.22%  fell 0.4% to 337.17, hitting intraday lows near the close of the session after Russia called for a meeting with the United Nations Security Council to discuss the “serious escalation of violence in Ukraine,” according to French news agency AFP.

The meeting was expected to be held Friday afternoon U.S. Eastern time. The Stoxx Europe 600 still finished higher for the week by 1.3%.

A Ukrainian military operation launched Friday has left “many” pro-Russian activists dead as Ukraine tried to regain control of the pro-Russian separatist stronghold of Slovyansk, Britain’s BBC reported Ukraine’s interim president Oleksandr Turchynov as saying.

Among country-specific indexes, Germany’s DAX 30 DX:DAX -0.49%  fell 0.5% to 9,556.02. German Chancellor Angela Merkel met with U.S. President Obama on Friday in Washington at a time that a number of German businesses are cautioning against expanded sanctions that could target Russian industries.

Russian equities finished lower, leaving the blue-chip MICEX Index XX:MCX -0.09%  off 0.1% at 4,458.17, and the RTS index RU:RTS -0.58%  down by 0.6%.

The Stoxx 600 briefly climbed after the U.S. Labor Department reported the addition of 288,000 jobs in April, well above the 215,000 nonfarm jobs expected by economists surveyed by MarketWatch. The U.S. Federal Reserve has been monitoring labor-market conditions as part of its strategy of reducing stimulus efforts as well as timing an eventual raise in interest rates.

The European Central Bank will meet on Thursday and is widely expected to keep monetary policy unchanged. But the ECB is also “likely to continue keeping hopes of Christel§further action alive,” said Credit Suisse analyst  Aranda-Hassel in a note Friday. “This because the challenge is to continue stalling the upward pressure on the euro fundamentally supported by the relatively tight monetary policy and high current account surplus.”

The heightened tensions between Kiev and Moscow came ahead of a three-day weekend in the U.K. and Ireland that will see trading shuttered on Monday.

The U.K.’s FTSE 100 UK:UKX +0.20% held to higher ground Friday, ending up 0.2% at 6,822.42, topped by rallies in shares of Royal Bank of Scotland Group PLC UK:RBS +8.19%  and InterContinental Hotels Group UK:IHG +8.20%

RBS shares rose 8.2% after the 80% state-owned bank said first-quarter profit jumped to 1.2 billion pounds ($2.02 billion). Shares of InterContinental Hotels UK:IHG +8.20% advanced 8.2% as well after the company, whose brands include Holiday Inn and Crowne Plaza, said it plans to distribute $750 million to shareholders through a special dividend.

But AstraZeneca PLC UK:AZN -0.15%   AZN -0.09%  shares gave up 0.2% as the British drug maker rejected a sweetened merger offer from Pfizer Inc. PFE -1.28% , saying the higher bid of £50 a share ($84.46) was “inadequate,” and would dramatically dilute AstraZeneca shareholders’ exposure to its “rapidly progressing” pipeline.

“As such, the board has no hesitation in rejecting the proposal,” said AstraZeneca’s Chairman Leif Johansson in a statement.

Elsewhere in the drug sector, Germany’s Bayer AG DE:BAYN +0.08%  is close to a takeover of Merck & Co. Inc.’s MRK -2.35%  consumer-healthcare unit in a deal valued at $14 billion, Bloomberg reported on Friday. Bayer shares ended flat in Frankfurt. A representative from Bayer declined to comment on the report, while a spokesperson from Merck wasn’t immediately available to comment.

France’s CAC 40 FR:PX1 -0.65%  shed 0.7% to 4,458.17, after being closed Thursday for the May Day holiday.

There was overall improvement in the euro-zone’s manufacturing sector in April, with recovery in the area becoming broader-based, according to the final reading of Markit’s purchasing managers index. It rose to 53.4 from 53.0 in March, slightly higher than an initial reading of 53.3.

Source: Market Watch