Report: Russian stocks drop most in world after Turkey shoots down jet

MOSCOW, Nov 24 (PRIME) -- Russian stocks fell the most worldwide and bonds slumped as Turkey said it shot down a Russian fighter jet close to the Syrian border, heightening political tensions in the region, Bloomberg reported on Tuesday.

The MICEX Index fell 1.5% to 1,839.62, the most in two months on a closing basis, after Anadolu Agency cited sources in the office of President Recep Tayyip Erdogan on the military action. The pilots ejected and parachuted to safety, AHaber television reported. Russian bonds dropped for a second day, pushing five-year yields up 16 basis points to 10%.

The developments are sparking concern unrest will worsen in the region as Russia and France widen their offensive against Islamic State in Syria in the wake of the Paris attacks. Any deterioration in relations between Turkey and its second-biggest trading partner, Russia, threatens to undermine economic ties and growth prospects for companies.

“A break in the relationship between the countries will have a direct economic impact,” Joseph Dayan, head of markets at BCS Financial Group in London, said by e-mail. “Overall, the two sides do not have an interest to completely break down relationships. The probability of military confrontation or a freeze in trade relations is highly unlikely.”

Russia’s Defense Ministry denied that the aircraft had ever left Syrian airspace, while acknowledging that one of its jets had crashed in the country. The pilots presumably ejected and a search is going on for them, the ministry said on its website.

The downed jet also shocked Turkish markets, with the Borsa Istanbul 100 Index declining 1.5% in Istanbul, its biggest slump on a closing basis since Sept. 28. The lira weakened 0.7% to 2.8698 per dollar and two-year government notes slumped, pushing yields up 15 basis points to 10.49%.

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