EUROPE MARKETS: European Stocks Drop After Fresh Russia Sanctions

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets moved broadly lower on Thursday, after the U.S. and the European Union each announced a new round of sanctions on Russia, bringing Ukraine tensions back in focus.

The Stoxx Europe 600 index slid 0.5% to 341.43, after posting the biggest one-day percentage gain since April on Wednesday.

Among notable movers in the pan-European index, shares of Banco Espírito Santo SA slumped 7.5% after Standard & Poor's Ratings Services late Wednesday lowered the lender's rating to B- from B+ and said it kept the long-term rating on negative watch. BES shares soared 20% on Wednesday after comments that shareholders stand ready to participate in a capital increase amid financial troubles at parent company Espirito Santo International.

Shares of Sandvik AB gave up 3.4% after the Swedish engineering group reported a drop in second-quarter profit.

Bucking the negative trend, shares of ITV PLC rallied 7.9% after news that Liberty Global PLC (LBTYA) is buying a 6.4% stake in the U.K. broadcaster for 481 million pounds ($824.18 million).

Russia sanctions

On a country level, Russia's MICEX index slumped 2.7% to 1,435.36 after the White House widened sanctions against Russia. The U.S. is restricting access to the American debt market for some Russian banks, energy companies and defense firms. Meanwhile, the EU said it would announce detailed sanctions by the end of July.

State oil producer Rosneft was among sanctioned firms, sending the shares down 4.6% in Thursday's trade.

Jim O'Neill, economist who coined the BRIC term and former Goldman Sachs Asset Management chairman, told CNBC on Thursday that "it's easy for the U.S. to make a noise with sanctions, as there's not as much on the line as for Europe."

"For some parts of Europe, Germany and Italy in particular, it's a big deal," he said.

Germany's DAX 30 index fell 0.3% to 9,830.25, while France's CAC 40 index lost 0.5% to 4,349.45. The U.K.'s FTSE 100 index dropped 0.4% to 6,758.00.

In data news, the final reading on euro-zone inflation for June confirmed that consumer prices rose a meager 0.5% last month.

Among movers in Europe, shares of SAP SE (SAP) climbed 4.1% after the German software company raised its full-year revenue outlook for cloud applications.

Carrefour SA added 1% after the French supermarkets company said sales rose in the second quarter.

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