Stock markets around the world fell yesterday after Ukraine said Russia moved more troops into the country, escalating the risk of the region’s crisis spreading, as nervous investors shifted money into gold and US and German government bonds.

The euro hit a 21-month low against the Swiss franc and fell against the yen as worries about intensified fighting between the Ukrainian military and pro-Russian separatists drove investors to seek safe-haven currencies.

Ukrainian President Petro Poroshenko said Russian forces had entered Ukraine, and he convened his security and defence council to decide how to respond.

The tensions put riskier assets firmly under pressure with the Standard & Poor’s 500 index falling below the 2,000 threshold following a record close on Wednesday.

In midday US trading, The Dow Jones industrial average fell 52.24 points, or 0.31 per cent, to 17,069.77, the S&P 500 shed 3.99 points, or 0.2 per cent, to 1,996.13 and the Nasdaq Composite declined 10.15 points, or 0.22 per cent, to 4,559.47.

The pan-European FTSEurofirst 300 index snapped its three-day winning streak, falling 0.7 per cent at 1,369.15 points. Tokyo’s Nikkei closed down 0.5 per cent at 15,459.86.

The MSCI world equity index, which tracks shares in 45 nations, fell 1.81 points or 0.42 per cent, to 430.44.

Meanwhile, ten-year German Bund yields hit a record low of 0.868 per cent, and 30-year US bond yields touched 3.059 per cent, the lowest in 14 months.

Bond yields worldwide have fallen in recent days as traders bet on new stimulus from the European Central Bank as soon as next week in a bid to avert deflation in the eurozone.

German inflation came in at a steady 0.8 per cent ahead of today’s eurozone number.

Corresponding Spanish figures saw a slightly smaller-than-forecast drop as revised second quarter GDP held steady.

These weak inflation readings overshadowed an upwardly revised US second-quarter economic growth reading.

In the currency market, the dollar and euro softened against safehaven yen, though the greenback retraced much of its earlier decline on the surprise upward GDP revision.

The dollar was down 0.05 per cent to 103.79 yen but flat against the Swiss franc at 0.9148 franc.

The euro fell 0.3 per cent to 136.62 yen and declined 0.1 per cent versus the Swiss franc to 1.2055 francs , close to a 21-month low.

Safe-haven demand pushed spot gold prices higher for a third day, rising 0.5 per cent at 1,289.50 an ounce.