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European Stocks Drop for a Second Day on Ukraine Conflict

Air France-KLM and Deutsche Lufthansa AG dropped at least 1.5 percent each after saying they would avoid flying over eastern Ukraine. Volvo AB retreated 4.4 percent after posting second-quarter profit that missed analysts’ estimates. Ericsson AB advanced the most since January 2013 after posting quarterly profit margin that beat projections.

The Stoxx Europe 600 Index lost 0.6 percent to 337.6 at 8:09 a.m. in London. The equity benchmark fell 0.9 percent yesterday after an Ukrainian official said that pro-Russian separatists shot down a Malaysian jet near the eastern town of Torez. It has still risen 0.3 percent this week. Standard & Poor’s 500 Index futures slipped less than 0.1 percent, while the MSCI Asia Pacific Index dropped 0.3 percent.

The Boeing 777 airliner was shot down in the midst of Ukraine’s civil war, heightening concern that Europe’s worst geopolitical crisis since the end of the Cold War is escalating. Ukraine said all 298 people on board the Malaysian Airlines flight from Amsterdam to Kuala Lumpur were killed. The state security service said it intercepted phone conversations among rebels discussing the missile strike. Russian President Vladimir Putin denied his country’s involvement.

Emergency Meeting

The United Nations Security Council will hold an emergency meeting over the incident later today. The U.S. and European Union this week imposed the most aggressive sanctions to date on Russian businesses and said more may follow, acting after weeks of threats to squeeze Russia’s $2 trillion economy over the confrontation in Ukraine.

A gauge of travel and leisure stocks in the Stoxx 600 declined 0.9 percent. Air France-KLM lost 2.6 percent to 8.54 euros and Lufthansa retreated 1.5 percent to 14.38 euros. They were among airlines worldwide that said they stopped flights going over eastern Ukraine.

Volvo fell 4.4 percent to 88.25 kronor after the world’s second-largest truckmaker reported second-quarter earnings before interest and taxes of 3.56 billion kronor ($521 million), missing the 4.28 billion-kronor average estimate of analysts in a Bloomberg survey.

Ericsson rallied 8.1 percent to 85.95 kronor as the world’s biggest maker of wireless networks said gross margin rose 4 percentage points to 36.4 percent in the second quarter, exceeding the average analyst estimate of 35.5 percent.

Electrolux AB gained 3.5 percent to 176.80 kronor as the world’s second-biggest appliance maker posted earnings before interest, taxes and one-time items of 1.17 billion kronor, surpassing the 1.1 billion-kronor average projection of analysts surveyed by Bloomberg.

(Source: Bloomberg)