The euro and German stock markets slumped after Russia's Gazprom further curbed natural gas flows through the Nord Stream 1 pipeline (details here).
The move underscores a widespread belief in markets that Russia is going to use natural gas as a key tool to achieve its aims in Ukraine. By cutting the pipeline from about 25% to 20% of capacity it means Germany will not have enough gas to supply its country this winter without cutting back demand. Gas market watchers say it will mean Berlin will have to invoke emergency programs that currently put the burden on industry to cut back first.
European stock markets are generally in positive territory today but the Dax fell 80 points on this news and is down 0.5%. The euro is also feeling some pressure and has given back its earlier gains.
There's always some hope that these moves are temporary or resolvable but that's getting tougher and tougher to believe.
