Ukraine-Russia clash sparks global rush for safety of bonds and gold

Stocks are down and safe-haven gold is climbing as investors took fright at escalating tensions between Russia and Ukraine.

Ukraine's president Petro Poroshenko earlier said artillery destroyed a "significant" part of a Russian armoured column that crossed a rebel-held section of the Russia-Ukraine border.

Russia, in response, accused Ukraine of attempting to disrupt a Russian humanitarian aid mission to eastern Ukraine and called for a ceasefire in the region to allow for the deliveries.

Gold, a shelter for investors in times of uncertainty, surged 7 points, above psychological barrier of $1,300 per ounce.

Investors also flocked into bonds.

Wall Street swung into the red, with the Dow Jones down 0.28pc. Meanwhile the Dax in Germany dipped 0.1pc on reports that Ukraine troops "destroyed" part of an armed convoy from Russia.

^{Dow Jones drops. Source: Bloomberg}

In London, all of the FTSE 100's gains were wiped out by the news.

^{FTSE wipes out gains. Source: Bloomberg}

Meanwhile, the CBOE Volatility Index, a measure of investor anxiety known as the Vix or “fear index”, leapt more than 11pc.

^{Vix index spikes. Source: Bloomberg}

The oil price has spiked on the news.

^{Oil price jumps Source: Bloomberg}

Investors have been concerned about the potential fall-out to any escalation between the two countries, though recent signs of easing tensions had lifted equities throughout the week.

"If the reports are true that there is an exchange of arms between Russia and Ukraine, that is a setback in the recent calm. It is hard to know how serious this is, but any sustained upturn in violence could lead to a short-term setback," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Asset Management.

"Still, so far it has not paid to get too defensive."

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