Global equity markets reacted to news that tensions between Russia and Ukraine had flared up once again on Friday, with European equities particularly badly hit.
News that a Russian convoy of 90 aid trucks had entered Ukraine hit stocks amid fears of further unrest, but some losses were pared after Federal Reserve Chair Janet Yellen reiterated that significant slack remains in the U.S. labor market.
Ukraine's security chief Valentyn Nalivaychenko said the crossing of the border marked a "direct invasion by Russia of Ukraine", Reuters reported. The country called on its international partners to unite in a "decisive condemnation of illegal and aggressive actions".
The Russian trucks are headed to the city of Luhansk in eastern Ukraine - a pro-Russian rebel stronghold.
By 3:00 p.m. London time, the French CAC (Euronext Paris: .FCHI) 40 traded around 0.5 percent lower, recovering from its lows earlier in the afternoon as Yellen said the U.S. economy was getting closer to the Federal Reserve's objectives at a meeting of central bankers in Jackson Hole, Wyoming.
The German DAX (^GDAXI) - thought to have the most exposure in Europe to Russia - was down 0.6 percent, and Britain's FTSE 100 was flat, paring some losses. The pan-European FTSEurofirst 300 (FTSE International: .FTEU3) was down 0.1 percent.
"Markets have a memory of what happened last week - things were going swimmingly and then everything was thrown off because of geopolitical developments," said Jasper Lawler, market analyst, at CMC markets.
"The Germany DAX is particularly vulnerable because of its trade ties to Russia, and so is Europe as a whole."
U.S. stocks wavered between modest gains and falls, although the S&P 500 (^GSPC) fluctuated near its record high, as Yellen spoke.
The price of Treasurys - seen as a safe haven moved higher on Friday. The yield on benchmark 10-year Treasury notes-used to calculate mortgage rates and other consumer loans-was around 2.413 percent.
Russian stocks hit
Lawler highlighted the potential for a "sharp snap-back" in spot gold (Exchange:XAU=), which was already trading 0.3 percent to $1,280 per ounce on Friday amid the news.
The price of Brent crude slipped slightly, however, to $102.41 per barrel, as ample global supply offset geopolitical concerns.
In Russia, stocks on the blue-chip MICEX index fell sharply on Friday, losing as much 1.75 percent. The Russian ruble also depreciated around 0.5 percent against the dollar.
Timothy Ash, head of emerging market research at Standard Bank, highlighted that Ukraine had said the Russian trucks would not be attacked, but said the move by Russia was still a "high risk operation".
"(There's a) not insignificant chance that trucks suffer damage someway along the two hour route to Luhansk and back, given that this is a war zone after all, and heavy fighting is still on going around Luhansk," he said in a note.
"A question remains as to how Russia will react if the convoy comes under attack from any side - remember that civilian convoys have been hit around Luhansk in recent weeks. Obviously all this complicates matters ahead of Merkel's visit to Kyiv this weekend, and then ahead of the Minsk summit next week."
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