Asia stocks drop amid flight to safety on Crimea as wheat surges

Risk aversion rules

G-7 Condemnation

Kerry’s trip to Ukraine’s capital, scene of a bloody uprising that precipitated the current crisis, comes after the leaders of the Group of Seven nations condemned Russia’s actions as a clear violation of Ukraine’s territorial integrity.

Ukraine yesterday mobilized its army and called for foreign observers as gunmen surrounded military installations in Crimea a day after Putin got lawmakers to rubber-stamp troop deployments. The former Soviet republic is on the “brink of disaster,” interim Prime Minister Arseniy Yatsenyuk said yesterday.

Yields on 10-year Treasury notes fell to 2.59 percent, headed for the lowest close since Feb. 3, while rates on similar-maturity Australian government debt dropped a sixth day, losing six basis points, or 0.06 percentage point, to 3.96 percent, headed for the lowest close since Oct. 3.

The Markit iTraxx Asia Index of credit default swaps on bonds in the region climbed three basis points to 136 basis points just after 8 a.m. in Hong Kong, after touching an almost two-week low of 132 basis points last week.

Hryvnia Forwards

Three-month non-deliverable contracts on the Ukrainian hryvnia climbed 0.9 percent. The currency halted a four-day tumble Feb. 28, gaining 7 percent to 9.95 per dollar, while the ruble climbed 0.4 percent to 35.8860 a dollar in Moscow after dropping for three days. Bank Rossii, which manages the ruble against a basket of dollars and euros, will probably be intervening to stem declines today “far more aggressively,” said Sebastien Galy, a senior currency strategist in New York at Societe Generale SA.

One-month NDFs on the ruble versus the dollar strengthened 0.3 percent to 36.251 per dollar, after sliding the past four trading days.

Rising oil prices typically fuel gains in the ruble as the government budget gets around 50 percent of revenue from the energy sector. Ukraine hosts a network of Soviet-era pipelines connecting Russia to markets in Europe. Moscow-based OAO Gazprom supplied about 30 percent of Europe’s gas last year.

Corn for May delivery gained as much as 2 percent to $4.7275 a bushel on the Chicago Board of Trade, the highest price since Sept. 12, before trading at $4.715. Wheat futures increased as high as $6.295, the biggest intraday gain since Aug. 26 and the highest level since Dec. 13. Ukraine was set to become the third-biggest corn shipper this year, while its wheat exports ranked sixth in terms of overseas sales.

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