>> ukraine accuses pro-russian rebels of shooting down the malaysian airliner jet. >> brock obama wants answers. cause europe to take investigation lead. take theans have to lead on this. they should be outraged in european capitals. asian stocks fall from a

six-year high. >> welcome to "countdown." we have some pretty big news to get through the day. >> the airliner was shot down over the eastern ukraine. the government blamed the attack on pro-russian rebels. deniedebels responsibility. it appears a russian-made ryanle hit the plane, chilcote is ukraine with more. give us a sense of what you have been experience.

the russian rebels they are arguing that this was done with a service to air missile. this was fired at some point yesterday in that area of eastern ukraine. a different ward. and ukrainian forces. the insurgents have denied that. the question of course is i was flying here is what was flight 17 doing there at all. that plane was traveling at 33,000 feet. there were restrictions.

the malaysian air flight was in the right war was allowed to be flying where it was. obviously, what was clear was a surface to air missile is what nato calls a gadfly. today is manyeen many airlines saying that they are not going to find east of the country. going tolines were avoid ukraine together. i just traveled here from moscow and the airline that i am on, , it is safe tone fly. will be the case in while the conflict continues. >> the political reaction has been coming hard and heavy. we have had held a clinton react, we have had obama react.

what do you make of the language of responsibility from the global powers. it was perhaps from insurgents. it was only the us trailing prime minister that has really pointed the finger. it were a few dozen australians on this flight. it is a real tragedy for australia. the prime minister was a far as to say that it look like this was brought down by surface-to-air missile, and look like it was provided by the russians. and that russia, if that is proven true, should bear a great deal of responsibility for the accident, for this tragedy itself. presidenthe russian

not really addressing the issue of who fired the missile. but the same that ukraine bears responsibility for this crash because it is ukraine that bears responsibility for the strides in this region of ukraine and if it wasn't for the strife, this crash would have never have happened. that is what the russian president as he addressed his cabinet. >> we have already had sanctions imposed. it was just yesterday that we were reporting it. you are outlining the exact that had been imposed on energy companies, on banks. what will it be if it was the russian separatists that have enacted this attack upon the malaysian airlines or whether it did it was an accident, what are the next steps? >> the united states and perhaps

the european would see that is grounds for more sanctions against russia. ishink the issue here candace countries prove that this was a russian supplied weapon fired by the insurgents without a shadow of a doubt. nows very difficult right to say unequivocally that indeed this was fired by insurgents, provided by russia or as some have alleged in ukraine, fired from russia itself into ukrainian airspace. that is of course what the conversation, the focus of all of the discussions are going to leadhile ukraine tries to an international investigation at the crash site. i would point out that the crash site is not under the control of the ukrainian authorities, this

is a very part of the country where the cleaning government has very patchy control. there are a lot of separatists and it is not clear how serious and thorough and objective investigation can be done. >> thank you very much. life from kiev. do stay safe. the separatists have agreed to close the crash site and make it safe. we will have to see how much that can be upheld. the skit a market reaction. >> we have had the asian session trading. bring you up-to-date with where we are on u.s. equity futures. has a fairlysion tough time, it was down from a six-year high. a couple of consequences, these are the s&p futures. i can see that this starting at eight on a moment on futures. these markets did react into the

close in new york. they have subsequently have gone ever so slightly from their lows of the day. you have seen a couple of different things, the s&p futures. i want to show you some of the global markets. 32%.ility rose by there is a sense of unease around the world in terms of what happens. >> and we have to remember that and the properer escalation. the first time we are seeing ground invasion. a very very tough day, trying to

assess of where we are on these events. is what wey, this woke up to. this morning, you had what we just talked about, you have this ground invasion into gaza. you look at what happened at the opening bell across most of the markets. have recovered a little bit of that. you look at volumes, for example, they're still fairly light. as far as risk aversion is concerned, it is even more when you look at volatility. you just talked about the fix index, up, 30%. here in asia, there is a similar measure. you look at the japanese yen, obviously a safe haven demand here finishing up the yen to just about the highs and five months. it is weakening a little bit right now. we are still close to 100 12 102. we have been trading at about

100 hurt he. you the 10nt to show year. 52-53 basis points. more expensive, compared to when we went to bed. it is come down about eight dollars an ounce. look at this, resolute mining, gold mining stocks in australia were all. -- were all pushed up. we are basically at a 103.50. risk rhenium, watch out for that. digest tos try to what extent that europe will be

drawn into more sanctions. >> thank you for that market roundup. >> who will be having far more on this tragedy of the shot down plane, of course the malaysian ,irline 17 crashing in ukraine clearly we will be looking at what the evidence is, the evidence suggests that the moment that it is a russian air defense missile that hit to this point. we will be speaking of course to the ukrainian foreign minister. we will be with him live from ukraine in a moment to discuss who exactly is behind this and get the ukrainian take. back after this.

>> the flight, passengers and crew came from many different countries. but today, regardless of unitedlity, we are all in grief. >> that was the malaysian prime minister speaking at a news conference where he confirmed the flight tonight give a

distress call before disappearing from the radar screens at 36,000 feet, that was above ukraine. you are welcome back to "countdown." >> we will talk more about this, the eu and america have already unveiled a new round of sanctions. of course, that limits russia's access to financing in light of it. thathat they are alleging the moscow separatists used surface to air missiles. what new harsher measures could be imposed? for more, let's join the executive director and head of markets. thank you for joining us. , we had sanctions yesterday, this is an enormous tragedy clearly, still trying to work out what happened. where do you think this leads europe and russian tensions right now, doesn't accelerate a man is >> it definitely accelerates the deterioration of this situation which was already

deteriorated. for the first time, they have had a meaningful impact on the russian economy. the way the americans constructed these sanctions was to make the loudest noise but in terms of the actual economic impact, there were actual economic impacts but they were quite focused and narrow. the situation is going to accelerate. >> we will have to pause here because we have been trying to get the ukrainian foreign minister and he joins us now. thank you very much for joining us this morning, sir. let's talk about the big issue, which is of course the evidence and the evidence at the moment that the u.s. is saying that it looks as though it was russian separatists.

that have an air defense missile which appears to have hit the malaysian airline plane. as according to the u.s. military. they've accused the rebels of downing the plane. what evidence do you have at the moment? what can you tell us from your investigation so far? >> good morning. firstly, i would like to express once more my deepest condolence to the relatives and friends of those that were on this plane. we intercepted a number of phone calls between the terrorists who were talking about shutting down the plane. now, we have been translating the phone calls in english and , the internet, and the news channels right away to provide the clear proof of who shot down the plane.

>> we are trying to now cap are the evidence, i understand we are trying to bring in our correspondent who is in kiev at the moment. these phoneanaged calls. how did the weapon get hold of that which was fired by russian separatists. through fromtted russia, was a delivered from russia? we have just lost the foreign minister of ukraine. hopefully we will bring him back as soon as possible. joseph to bring back some reaction. they said they, if there talking about, and this is the attack. could this bring more sanctions? what is the most meaningful

kind of outcome of the situation, the level three sanctions. sanctions, thee energy sector and the financial sector. this is a very low probability. >> what is level three exactly. capital access. >> this is quite particular and what they put into place. it was not a level three , thison, it came close, is part of the fundamental financial markets. gas pump think is the third-largest lender in the

russian market. they've done as curtail the ability of these financial institutions to go to the is not aarket, this blanket sanction on the whole financial market. this situation yesterday could , this would be usually detrimental. about thek consequences for europe. we are not a level three just yet but russia and the sanctions and the ongoing dispute has impacted confidence. forced to dobe more in terms of sanctions. rate responseote from europe. >> what these have done are the draft resolutions. they have been referring to these. >> and lending the public institutions in russia.

fair, this was in a much larger scale. russia does not need them to land in order to function. if this is all that will come out of the european union, even in light of what is happening, the system not going to be very meaningful. if this does put into place further sanctions, then we will have to reconsider this. the european union has been dragging its feet in terms of putting significant sanctions in place for very good reasons. is spliture to russia between sectors in geography that is for difficult to coordinate. there is a meaningful feedback loop that will come back to europe if they try to cut off russia from its energy training, financial institutions. i think the will do everything to avoid taking this to the next level. >> yes, we have are looking at the sanctions,, financial

instability, where we are at the moment, there has been his accusation of what the u.s. did in terms of sanctions, has got financial consequences all the foraround for russia and global markets, is that a step too far? >> it is closer but it is a step too far. >> what is it that is the straw that breaks the camels back? >> all of the companies that were targeted yesterday and we can put aside the arm exporters, they were severely targeted yesterday. but the four financial institutions that were targeted when i find themselves in any financial distress in the near future. nova tech is very well funded. flow very strongly cash generative. inin, this is well funded, terms of financial distress, actual financial distress to these companies or the financial sector in russia, this is not

where we are at the moment. we see capitall flight? >> we are still off the lows or from the credit side that we have seen in late may during the ukrainian crisis. market fell between three percent and four percent and then it fell another three percent in after-hours trading once we found the news of this tragedy. you will see a long tail of u.s. investors and financial institutions pulling out of the russian market but it was quite calm in terms of the selloff, we did not see julie unusual volumes traded and that is because of the nondedicated money not in the markets anymore. >> ok, we will have to draw a line. in terms of the currency, you talk about the stocks on the currency side. >> we have seen ruvell kind of cross the 35 level but we need to be very clear, the russian the monetary,

policy, everything is very solid so far. this is basically pricing in risk. >> ok, joseph, thank you for putting everything on this fairly tragic geopolitical stage in context. israel has launched a ground offensive into the gaza strip. soldiers, bulldozers, and tanks moved into the coastal enclave after 10 days of airstrikes failed to stop militants firing rockets. cease-fire collapsed. our middle east editor joins us from tel aviv. give us the latest, how bad is the situation? hashe latest is that israel suffered its first casualties since the beginning of this ground operation, is not quite clear, the circumstances surrounding his death. it took place in the northern part of the gaza strip. as they went in back by heavy artillery.

israel says it has killed 14 militants, and is according to the associated press overnight. this operation is the biggest offensive we have seen since 2009 during that operation, more than a thousand palestinians were killed and both sides faced accusations of war crimes. is not really a move that the prime minister has taken lightly but after 10 days of being barraged by rockets, ok, the majority of them have not caused any damage and haven't caused any deaths come israel was growing frustrated. also the tipping point really was what happened yesterday morning before the temporary cease-fire went 13 militants emerged from a tunnel dug kilometers into israel underground from the gaza strip into israel. they emerged, they were spotted. at least one militant was killed. they have an answer to the rockets being fired. what they haven't got an answer

to is the tunnels and netanyahu telling his forces before last night's mission to destroy the tunnels dug from the gaza strip into israel the territory. that round, wer will speak to you through the morning. stay safe in tel aviv. >> after the break, we are alive in kuala lumpur. we will be talking much more about the reaction to the shooting down of the malaysian airlines flight, just to reiterate, we have had 298 passengers and crew all died in this tragic event. shot down over eastern ukraine. the blame game is upon us. the u.s. military and intelligence officers feel that it was a russian-made air defense missile. we have spoken with the foreign minister in ukraine, the phone calls that were intercepted before the shooting ton of flight 17, on its way

kuala lumpur, that they believe that they have clear proof that it was the separatist but that is still a matter for debate. >> we will be back after this short break.

>> it is the two words that everybody hates, it is risk off, for more direct outcome for the ruble, look at this, five days of losses against the dollar, you can see it's down by over two percent. that was the biggest drop since

russia went into crime era. the expectation is that this could escalate and everyone is talking about escalation risk. you have more capital leaving russia, that of course means a stronger dollar and a weaker ruble. >> thank you. meanwhile, let's get you a check on bloomberg's top headlines. the malaysian jetliner was shot down in eastern ukraine killing all 290 people on board. it was flying from amsterdam to kuala lumpur over the main battleground of ukraine's civil war. the government blames the crash on pro russian rebels. the separatists are denying the hillary -- the accusation. >> hillary clinton weighed in on an interview on the crash with charlie rose. she says that if there is evidence linking rush to the crash, europe should do more with the u.s. to support ukrainians. >> europeans have to be the one

to take the lead on this. it was a flight from amsterdam to kuala limp or over european airspace. >> you can see more from interview later tonight on "charlie rose" and in israel, and benjamin netanyahu said forces have started a ground operation in the gaza strip. military advanced into hummus controlled palestinian enclaves last night. israel is ramping up its military campaign to stop airstrikes. militants have infiltrated israel by see and a network of tunnels according to israel. the prime minister called a press conference. that, theget to droppedn air stocks nearly nine percent.

this is after the consequences of the crash. we are bringing a little bit more on that as the morning goes through but the stock is down nine percent. let's talk to our correspondent in cornwall a limp or. it is a fairly tragic day. so, how has this played out? i simply cannot imagine the scenes at the airport and the political and personal reaction. >> we have got some more breaking news just ahead of that interview because malaysian air is saying that the aircraft had a clean maintenance record, the aircraft had a clean bill of health so says the malaysian airlines. and it had 17 years of service. clearly they were trying to say no fault to do with the actual aircraft.

clearly, it was fit to fly and indeed of course it was flying .ome 33,000 feet , this isthat zone where you're not allowed to fly above the military zone but clearly about 33,000 feet was where they had had the signoff of from the regulators, from the airline surveillance, the area said give the ok on your flight path. clearly, they had been cleared from the commercial traffic unit , the altitude was cleared. >> these are the decisions that all of the airlines actually make, whether they make a choice to fly over ukrainian airspace. easternose to go to the countries, some choose to take that flight path according to reports. that has to be reminded this is just four months, just four months after the

disappearance of flight 370. has been the longest search for missing jetliner in more than aviation history. now, and global tragedy because there were 154 dutch on board. i is being said by the u.s. military that this was pro-russian rebels and of course they used a russian-made air defense missile, but 100 54 dutch, brits, germans, belgians, indonesians, canadians, the astra aliens. it is just a guess chilean prime minister that so far said, really declared that russian separatists are to blame, it was a surface to air missile and that russia should bear some of the responsibility. >> of course we had that with the cranium prime minister. they have transferred from russian separatists who had translated the conversations

before it was shot down into a number of different languages, according to the ukrainians. >> of course, they deny the allegations. >> absolutely. says it is the number one question, she spoke with charlie rose last night. that is available to anyone that wants to watch it. hillary clinton with charlie rose talking about what is happening with russia, why they .ant to continue >> and why they want europe to take the lead. europe has been a lot more cautious. we can go out to malaysia. >> we have got so feedback on the phone. us,thank you for joining how are things in malaysia? i can only appreciate how tough it is. >> this is a tragedy felt on a national scale.

malaysians are digesting the news and mourning the loss of lives. it is been four months since mh 370 and this puts more pressure on malaysian airlines as there is yet to be closure on the banished flights. while more clarity is being sought, the malaysian prime minister did share during his press conference that he has token with his counterparts coordinate a response and spoke of the need for full investigation. establish atempt to humanitarian corridor to enable access to the crash site. the government has organized a support team made up of medical personnel. we have a press conference at 4 p.m. today. there'll be updates as the

-- gency malaysian airlines comes under rigorous scrutiny with this disaster and a national symbol for the country, the carrier had been a rough side this year and has buried the weight of more than one billion in losses over the last 3-4 years. , likely feeling more speculation about possible privatization exercises or bankruptcy. restructurelans to the ailing airlines. >> thanks for that roundup. let's take it to corporate news. of course, we are still waiting for potential news. they're said to be working to strike a deal.

under british takeover rules, they need to make a former offer by 5 p.m.. possible, $54the billion. he's a partner at farrar fund management and joins us. arst of all, this gives us deal. they wanted to support abilities offer of 53 pounds. >> first of all, good morning. there's a very good chance. it makes a lot of sense. there is a very nice premium built into the deal. a very nice tax benefit behind it.

i am optimistic that this deal will go through. mean?t does it what does it mean for the ceo? will he have a decisive role? he defended being independent in the first place. what do you think will happen in the new entity? yes, i think he would definitely rather see the company independent. when we spoke last time about the astra zeneca deal that was proposed by pfizer, it was obvious that the entire team was going to go home. he will have some synergy within division.gy this is 100% tax and version deals. there are literally no synergies

between the countries, so you'll need someone to manage all of ,he franchises, you have no one practically no one to manage them, so i think that they will retain a large portion of management, so i think it's back from management will still be there but will be much lesser extent that you have seen on the astra zeneca, another thing to be taking into account is astra zeneca was somewhat of a national asset, there was some pride involved. conceiveds much less as a proud national asset of great britain. i think this will go smoother than the pfizer deal did. >> let's talk tax. we brought it up, yesterday had taken be saying that the tax and version deals where american companies are trying to avoid their own tax regimes, by up

companies such as ireland -- companies in lower tax entries such as ireland. they want to back eight it. could the stop the deal going through. put a deal ing to place. this inversion process committed wasn't quite so appetizing. >> may wasn't an accidental date, just to show what kicked them off which is the pfizer deal. this is the brand name, the deal.rial this pick them off, but looking at relationships between republicans and democrats in thisess and thinking that lawsspective type of tax

has actually happened only once in history, it is very uncommon in the u.s.. i would say the chances of this suggestion becoming a reality and actually passing through congress are close to zero. the entire drill of putting this up in the air was to scare don't see and i just it happening. i would not be scared, i think the chances are close to zero of passing. at this time, a law of this magnitude in congress. >> would you hold the stock, if and when the deal gets done. but, where does it fit in the portfolio? is it one for you?

>> i'm not holding it right now. if they do by scheier, i will reconsider. i think you will see double-digit accretion by the end of the decade and i think, i've been a huge fan for a long time, so definitely have to look at the combined model and see what kind of synergies they are projecting and if it will fit our standards, then yes, i think there is a good chance that we will hold this post merger. >> there is the call, that is what we wanted. great to join us here on "contact." some banks will fail. that is the message from the ecb 's vice president. we will have more from him after the break. stay with us.

>> i want to be sure of what i say, apparently it was shot down, not an accident. blown out of the sky. that was the u.s. vice president joe biden speaking in detroit. he confirmed that ukraine has

except his offer to send experts from the national transportation and safety group to investigate. will come back to "countdown -- welcome back to "countdown." we are trying to work out the details of who shot down the airliner. new questions arise over why a commercial passenger jet was flying over what amounts to be a war zone. aviation agency issued warnings to stay way from the area. the region wasn't the subject of any alerts to pilots and the airspace above 32,000 feet was not restricted. let's bring in ryan chilcote. now, the reaction has happened,, they are saying they're avoiding the area. but, why has it taken this long now for associations to come up and say, we need to secure this area? >> i guess, where we have to

start is the sap to be a very transit point. is liket corridor, it going from western europe to southeast asia and in this particular case, it was going from amsterdam to kuala lumpur. , i meanay very popular very popular, just a couple of weeks ago, before the conflict began, about three months ago, there were up to 400 flights a day flying over eastern ukraine. back, obviously some airlines stopped flying that route, but even as recently as earlier this week, there was still about 100 planes every over easterning ukraine. you just pointed out that the wherection in terms of the aircraft was allowed to fly, they had to be above 32,000

feet. this plane, we understand was shot down at 53,000 feet, so they were in the right, and there was no suggestion from any itthe aviation agencies that would be dangerous to fly at that altitude. some airlines themselves decided that that would be too risky and curtail that activity. unfortunately, malaysia air, 517 wasn't one of them and what we have seen in eastern ukraine over the last week is the introduction of new technology, new surface to air missiles that are capable of taking down aircraft at much greater altitudes. this had been happening with extreme regularity over the last weeks. on monday, we had a military transport, ukrainian military transport lane, it was fine lesley at 20,000 feet on

tuesday, on tuesday we had a fighter jet, a ukrainian fighter jet, and on wednesday we had to fighter jets. you would have thought someone upset, maybe this isn't a safe altitude. that is what everyone is saying now. some are avoiding ukraine altogether. >> live in kiev, thank you. >> how has the banks, that is the final question of 2014, we talk stress test with the ecb's vice president.

>> welcome back. >> the european central bank released details of this years asset quality review and stress test. toldice president bloomberg television even though lenders have been raising capital. still sell.ill take thisat does not lightly as john farrell. they don't make it easy to understand what it is that they want you to understand, do they? collectively, they don't.

i think it is very hard to make it simple. and i think that he did quite a good job in that respect, this is u.s. banks. let's cut out the jargon. the methodology has to be vigorous. the next month, they're close to bankruptcy and the whole thing is use as not credible. many people thought there needed to be failures. will these banks fail? i said it they don't fail, what does this mean for the credibility of the test? >> you cannot measure the strictness of the test by necessary results, you have to assess the methodology and the rigor with which it was applied. i say that it is very likely that some banks will come below the threshold that is defined.

and they will need to raise capital, meaning capital shortfalls will be identified. it is not about the outcome but they said there will be failures. >> has been a lot of color painted for the disclosures, about what is going on here. what about the process that stood out to you? course you will get the results at the end of october. you get these results, they will give you some numbers. they will have to crunch the capital shortfall. when you do that, the banks will have to turn around. everybody will be sitting there, rubbing their hands, looking for an incredibly busy month. >> you are not going everywhere. we were talking about electrolux second quarter operating profit.

all about the guidance. about thell you that malaysian flight. >> that was shot down above ukraine. back in a moment.

ukraine accuses procreation rebels of shooting down a malaysian derek jeter killing all 200 -- a malaysian air jet killing all 290 people aboard. hillary clinton calls for europe to take the lead. >> the europeans have to be the one to take the lead. it was a flight from amsterdam over european territory. there should be outrage and european capitals. underway.nvasion israeli soldiers and tanks move into the gaza strip. >> this global unrest hits the m

arkets. asian stocks fall. russia's market is opening now. to "countdown." i'm manus cranny. >> i'm caroline hyde. >> it is beginning to trade. ycex beginning to open which dropped by three percent yesterday. some of those big stocks, yesterday -- it could take time for this market to go through an opening rotation in terms of its e stockance for -- th market is down 2.3%. day two on some of those big stocks that were under pressure yesterday. which would be the likes of rosneft and novatek. we are getting a live feed on

the micex, where looks like we're opening down 1.6%. teamwork.s you have got sanctions institutions in terms of the financial side. you have got no interruption in oil and gas, flow and supplies for the likes of rosneft and novatek. ulson whobank, john pa rash inthe 1998 cars russia, he says that by the end of the year, this market could be down by 10%. bank of america say that this a read this international incident coulding flight 17 provoke actual proper negotiation. so there we go. the micex down 23 points at the moment. russia is opening.

let's check on some of those stocks that we looked at yesterday. the micex down 1.6%. the ruble was flat. let's get to our main story. >> of course, we are focusing on the malaysian airliner that was shot down over eastern ukraine. the ukrainian government blamed the attack on pro-russian rebels. deny rebels responsibility. u.s. officials say that it appears a russian-made missile hit the plane. ryan chilcote has already flown out there to ukraine. what is the latest? >> the focus is clearly on the crash site, or perhaps it should be. what you would normally have is a very large indentation -- investigation with several companies involved and independent airline bodies

looking at the causes of the crash. obviously, they would be looking for the black walks. box. they would recover it and listen to it. what we have is an airplane that was brought down in the middle of a war zone. that area is controlled by the separatist. the ukrainian social government has no access to it. ukrainian officials are not able to provide any insight into what the actual crash site tells them. nor are there any other international observers on hands. many people have said they are willing to send people and officials and analysts to the site. again, the issue of security is a large one. for example, over the last couple of hours, the united states is saying they are ready to send people thehre. b-- send people there. but are they welcome?

what we had late into last night is the two sides, the insurgents and the ukrainian government, blaming one another. the ukrainian government saying that the separatist brought this down with a surface-to-air missile system. so broadcasting all over ukrainian television what they say were telephone intercepts between what they say was a helperist and his moscow discussing the crash site. be separatist says that looks like it is just a bunch of kid stuff. moscow official says they should not have been flying there in the first place. >> ryan, we will talk to you throughout programming. ryan chilcote in kiev. now, for more on what the forysian air crash means

tensions between russia and ukraine, we are joined by a macro advisory senior partner chris weaver. thanks for joining us. trite and put into context, because we heard heard statements from hillary clinton, we've had the russian foreign minister on the program saying -- the ukrainian foreign minister saying that they've translated the conversations and that it is very clearly separatists. saying they will start an investigation. what is your take on the language so far you have heard? >> i think everybody is being, on hethe russian side they are being very careful about this. it is absolutely understood that if it is proven that this plane was brought down by separatist using a russian-made missile that this most certainly going to put pressure on moscow to

very quickly start distancing itself from the separatist and close the border or would risk an escalation in sanctions probably moving into -- sanctions we have not seen yet. moscow is being careful with its language. something we are trying to get some context to in this scenario is what are level three sanctions? y mean economically for russia and for that matter what is the contagion effect into europe? >> yes. two, whichn at level is -- i suppose we could categorize as being inconvenient. the sanctions we saw from the u.s. this week against rosneft banks very much in that category, they had

high-profile names but did not disrupt business or prevent exxon from working in russia with rosneft. but we are coming to the end of softer sanctions. level three sanctions would be much more disruptive. for example, the u.s. could prohibit u.s. companies from working in the russian energy sector. that would disrupt the operations of russian energy. put one or two of the big commercial banks on the sanction list which would cause disruption in the russian financial markets. they could have the effect almost immediately. the feeling is that we are at the end of softer sanctions. to respond ineds order to avoid the much harder sanctions. and concern is that an event like this, if not handled properly, could certainly push the u.s. and europe into stage

three sanctions much quicker than anyone had previously thought. if that were to happen, then he would see a much weaker ruble, as we sqaaw in march. it makes it much more difficult for the central bank to control inflation. also, will spike capital flight. we had a big spike in capital flight in march when prices were last escalating. to over $60 billion in the first quarter which is as much as all of last year. capital flight has seized in the last couple months. on anyld spike again movement for level three sanctions. afer, thank you for joining us by phone on the escalating tensions in ukraine and russia. it is almost 10 past 7:00. european equity futures are trading.

traders are reacting to this unfortunate situation. a lot of the equity markets lost a lot of their value yesterday evening. but this is how we are looking at the moment in terms -- that we double checked. where are we? london 4314. let's take those, yeah. >> we are looking at the futures trading lower. i want to bring you some breaking news in terms of the u.k. market. competition markets authority is a regulatory and the banking area. they said essential parts of the ofretail banking sector lack effective competition. they do not meet the needs of personal consumers or small to medium-sized enterprises. we need calls saying more money to go to small businesses. we need more personal consumers need to be leant more. >> it is the -- you to-- the

next shoe to drop. we have had ppi. id competition and markets authority is consulting on a provisional decision that there should be a joint in-depth market investigation into the markets for personal current accounts and banking. another probe. as we said, markets trading lower. >> i want to correct something for our viewers. our apologies. european equity futures were down 1%. they are not. london futures are down. paris is down 17. the dax down 28 points. 1/3 of 1% lower. that was erroneous price things that we had. those were yesterday's pricing. because russia, will keep on talking about this dreadful situation regarding mh 17, the down.ian airlines shut

russian facing tough economic penalties for the situation and ukraine. now that passenger jet shot down allegedly by separatist using russian weaponry. how far could sanctions now go? upwill talk to ivan isaacs next. ♪

and there does seem to be some growing awareness that it probably had to be russian insurgents. how we determine that will require forensics, but then if there is evidence pointing in that direction, the claimant had to have come from russia. what more the russians may or may not have done we do not know. former secretary of state hillary clinton speaking to charlie rose. russian separatists have denied they shot down flight mh 17. aegon see more from hillary clinton a little bit later tonight on "charlie rose." you are welcome back to "countdown." >> let's move on because the eu newamerica has unveiled a

round of sanctions to limit russia's access to financing in light of its involvement in the ukraine. russianalleging that separatists shutdown nh17. harsher sanctions could be imposed? so let's focused on russia first. there is a lot of geopolitical risk going on, but will there be more sanctions? what does that mean for investors? sanctionsay be more but it is important to work out that russian companies and banks have had several months to plan these kinds of eventualities. better prepared. a lot of them have moved their financing operations out of dollar denominations in order to give themselves a bit of breathing room. the interesting thing is that the market reaction is quite muted. i think that again goes with our flareups,these although they are tragic, and the airline is an interesting these flareups are

buying opportunities. ine west is also embroiled all sorts of other issues, not the least the middle east, where israelis have used this cover for an opportunity -- >> really? >> it is possible. the attention of the world was elsewhere. it is possible that is what has happened. the thing to remember is that the russians were the nation that supplied the iraqi government with jets a month or so ago when the isis crisis blew up. does the west have the appetite to turn too much pressure up on russia? i'd be surprised. >> the u.s. has more appetite in europe. hillary clinton saying that europe needs to take the lead. will europe ever take the lead? >> you're absolutely right. the u.s. is in the middle of

midsummer elections. a lot of the rhetoric is domestic consumption. it goes down well in american politics to see russia as a boog ey man inside europe. we have got to deal with these issues, not least the gas issue. and a great deal of trade that goes on. the italians have been vocal in their concern about the need to keep their business going and a time when you're's-- when eur ope's economy is under pressure. this will blow over. whether we get to the bottom of what happened is also debatable. truth is thehe first casualty of war. the russians will have a vested interest in sitting on this investigation. it has happened before. vincennes shots down in the rainy and commercial airliner. it did not affect the course of that conflict after -- the iranian commercial airline.

it did not affect the course of the conflict. >> when we checked european equity market futures, money is moving into the yen. there is a slight risk of sentiment. for you as an investor, when you look at the station what is happening in the middle east, does that counter over everything that is happening in the u.s.? the u.s.-russian situation in ukraine? >> we believe we are in a global bull market for risk assets. action by various central bankers, you can run a list down, particularly the fed this week again stressing that trigger point for tightening are very arduous. and there is a great hunt for yield. in that context, if you are bearish, if you think the end of the world is going happen tomorrow, the last thing you want to do is speculate. if you do not think that, then entry points in emerging

markets, the best ones, tend to come after or during a crisis. >> what you make of the call saying russia stocks will end the year 10% lower. do you think that is reasonable? >> it is difficult to make exact predictions. i would reiterate my point that if you look at the way to trade emerging markets is that they are by definition more volatile. a coup in thailand and another in egypt. it's tended to be after those crises that you get good entry points. if you are bullilsh as -- thissh as we are, we think is an excellent entry point. russian stocks are cheap anyway. wholewe look at the concept of where we are with central bankers at the moment,

and the whole debate on the global stage for zero rates, who will go first? will it be the u.k. or the united states? >> it is more likely to be mark carney, possibly in the first quarter of next year. the u.k.'s general elections ed for may, hef will want to demonstrate a degree of independence. a quarter point to burnish his credentials. they will go first and the fed later in 2015. we are still talking about baby steps in tightening. given how strongly locate economy -- strong the u.k. economy is. >> i am putting the ukraine and russia and the israeli situation in context. >> a quick update on the situation.irline

it was reported by reuters that a second malaysian airplane's black box has been found. there was no distress signal sent from the plane. this clearly was a surprise attack for want of a better word. whether it was done by russian separatists. >> that certainly brings hope that we will have some kind of a thorough investigation and not obstructed as there was some speculation that might be the case. we will talk other geopolitical risks as israel launches its first major ground operation in gaza in five years. aviv with the latest. ♪

." welcome back to "countdown >> i am manus cranny. israel has launched a ground offensive in the gaza strip. >> of course, soldiers, bulldozers and tanks moved into afterastal enclave airstrikes failed to stop the militants firing rockets at israel. elliott gotkine is live in tel aviv. what is the latest? tanksere are thousands of that have gone in. footage posted on youtube shows night vision images of tanks

going through a fenx. ce. smoke billowing out as they go into the gaza strip for the first time since 2009. the mission is to destroy the tunnels from the gaza strip and to restore quiet to the city of -- cities of israel for an extended time and doing damage to the hamas infrastructure. hamas says they have been waiting for this ground invasion to teach the israelis a lesson. >> is there any indication of how the ground operation is continuing? >> caroline, benjamin netanyahu took this decision relatively reluctantly. i will bring more about that in a bit. >> thank you very much, indeed. >> ok, from one seriously tel aviv inory in

israel and gaza, we will talk to ryan chilcote in kiev. stay with us. back with ryan after the break. ♪

." welcome back to "countdown lassitude jonathan ferro for an fx check. >> the big moves in the fx market were yesterday. in reverse some of these traits. look at yesterday dollar-ruble up by 12%. that one, the biggest move, lower for the russian ruble since march. that was when russia was annexing crimea. a big deal in yesterday's event not just or geopolitical risk but about escalation risk. big moves in the fx market, but

also euro-yen. money going into the japanese yen out of the euro. 5 month high for the yen. just like dollar-ruble, euro-yen came back a little in today's session. clearly, this market will be trading on headlines through the day. the big focuses russia-ukraine and do not forget what is going on in the middle east. two big geopolitical events. >> thank you very much, indeed. that's go to top headlines because of malaysia jetliner was shot down in eastern ukraine killing all 298 people on board. the government in kiev blames the crash on pro-russian rebels. the separatists are denying the accusation. earlier we spoke to the ukrainian foreign minister. >> we intercepted a number of phone calls between the terrorists who were talking about having shut down -- shot

down the plane. now we are translating the phone calls in english and other languages. internetll post it on and on news channels right away to provide clear proof who shot down the plane. >> and hillary clinton weighed in on the malaysia airlines crash in an interview with charlie rose. the former secretary of state says that if there is evidence linking rusher to the crass, europe should do more -- >> europeans have to do the one to take the lead here it is a flight from amsterdam to kuala lumpur over your care and territory. there should be outrage in european capitals. >> you will see more of hillary clinton's interview later tonight on "charlie rose." in israel, benjamin netanyahu says forces have started a ground operation in the gaza strip. heavy artillery, the

military advance into the last night.enclave israel is ramping up its military campaign to stop airstrikes. of course, let's get straight to our top story. the malaysian airlines jet shot down over east ukraine. ryan chilcote is in kiev. give us the latest on the ground. iswhat we have right now basically the two sides, the thergents in the east and central government exchanging accusations. the central government in kiev saying it was the insurgents that shot the plane down using a russian-made surface-to-air missile system. the only kind of system they say they could have reached this aircraft at such an altitudes, 33,000 feet. you heard ukrainian foreign

minister saying that they intercepted conversations between pro-russian insurgents describing the crash site in those conversations, you hear one of the insurgents who is apparently at the crash site saying that he does not see any sign of any military personnel. just kid's stuff. you hear the other individual saying, they should not have been flying there anyway. we cannot verify the audio . they are very compelling, when you consider that there have been many ukrainian aircraft downed in that same area. the insurgents say that this was not their work. they did not bring the plane down. they maintaining to not have the technology to do that. normally, what you have in situations like this is you have a national investigation. ukrainian national authorities

at the crash site. maybe even international organizations. remember, this is in the conflict zone in an area controlled by separatists. there i know are presented so the central government there. it is -- there are no representatives of the central government there. finding the black box. we have heard many countries including the u.s. a couple of hours ago offer their expertise and their personnel saying that they are prepared to go to the site. but will they be welcome? could they get to decide if they wanted to? know what has the answer. -- no one has the answer to that. >> let's talk a little bit more now about the investigation. that's the key issue. who has jurisdiction over the crash site. for more we are joined by a

professor, an expert on aviation safety. he is speaking to us by phone. thank you for joining us this morning. who technically has responsibility for flight mh17 and the box? >> you mean the black box? >> yes. yes, yes. thatrmal jurisdiction over should be with ukrainians, given that the crash happened on their territory. of anythingecovery bris, theh this de flight, the investigation, how do you envision that to be done and the best way between eastern ukraine and the russians? how do you think it should be best done? >> yes, that is a tricky question, given the current situation. formally the answer is simple. we knows far as

currently, it is ukraine that is where the border goes. because of that, ukrainian authorities officially have jurisdiction. own just to put is easily the crash site. and thus, they should be in charge of leading the investigation as well. it is likely that they will seek assistance from other countries, perhaps including russia, but the control and authority is with the ukrainians. dekker, to give validity to the investigation, what would you like to see happen in the next 24 hours? i presume this is the most critical time in terms of accumulating evidence. >> yes, that is a very good question. 24 hours is already quite an extended time in which evidence can easily disappear. understanding that there are some concerns about some of the evidence, some

critical evidence including black boxes have been found or disappeared. ofuld the -- pieces evidence end up in countries other thing ukraine, that would be likely in contravention to international agreements made i the international -- by the international aviation organization. >> mr. dekker. we will have to leave it there. a safety expert from griffith university speaking to us from brisbane. just to give you a feel of the international comments coming through across the wires. russia's reputation is at stake. this is a member of the cdu. lawmakersof the commenting on television. you want to establish the facts, but it is clear the whole world is shocked by this and thus russia's the petition is at stake. --russia's reputation is at stake. >> germany is on board.

>> and the dutch have the most human -- >> 154 people. let's move on because we have to tackle corporate news. ogle release sales that beat estimates that came in at $12.7 billion. 34%>ad clicks that rose for more, we are joined by thomas scholz. you helpe companies tackle these mobile marketing. it is a fascinating trend in google. in the first quarter there was concern that they had to migrate to mobile ads. you can't charge as much per click. but they are managing to wrap up the -- ramp up the amount of clicks. is google achieving the mobile migration? is it leading the way? it dominates. >> it's very strong and they are

innovating. i think specifically with mobile, you have less space on a phone. but the mix of clicks is different. if i'm looking for offices or desktop, i do something different. the mobile phoens are not that sophisticated. so people do not click that often. with google, you have desktop and mobile. they are combined. it is not the perfect set up for both. you cannot target tablets. they will improve constantly. >> it is interesting because he said yet. they are not that sophisticated. many feel that mobile advertising will be more expensive on advertising on your pc. they can work out where i am in london and in paris. and they will work out which

shop is closest to me. by google win out eventually the fact that we will be surfing the internet via mobile? >> they will be one of the leaders on very strong in this field. you have extra data that is available but it is a simple -- space,d in the mobile you need 100,000 impressions to get one paying customer. fewer people to get better results. >> this is the essence of what page has done. he has taken his own sites and he is adding value there so that the traffic goes to his own site first. >> it's a bsalance. you are referring to the desktop. bannerle, you have advertising and search. you can previewer game are a

piece of the film. now i know what i want. i am much more engaged. people get the right information at the right moment. google has great data capabilities. >> you advise clients. car companies and other companies, the likes of audi, debeers. facebook is very good at advertising as well. eating into google's market share. where do you advise your company to go? >> search is working extremely well. the other place is and are advertising. -- is bsanner advertising. there is facebook, twitter, amazon. you have the emergence of native ads. where there is much more embedded content. otherwise people get bored and click away. >> thank you for joining us

today. >> one of the accidental clickers, that's me. some banks will fail. jonathan ferro caught up with the man himself. ♪

welcome back to "countdown." as i said before the break, it was all about the european central banks. more details on this years asset quality reviews and the stress tanks that eurozone banks will undergo. the ecb vice president told bloomberg even though blenders have been raising capital, some banks will fail. jonathan ferro got the chance to go and speak with him yesterday. what did you make of this message? banks have raised capital. he was calm about the whole thing. >> he was. ecb that soin the much work is going into this. a terrific amount of work. they have been raising capital. he told me they have been strengthening balance sheet by 200 billion euros.

what it means, because they are frontloading and raising capital and deleveraging, a lot of these guys will probably pass these tests. these tests need to be rigorous and credible. mario draghi indicated last year that for them to be credible, somebody would have to fail. put that question to him, is that the case? this is his response. >> you cannot measure the strictness of a test by necessarily the results. you have to assess the methodology and the rigor. that say, it is very likely some bsankanks will come below e threshold that defined -- defined in the stress test. they will need to raise capital. meaning capital shortfalls will be identified. >> so this is the message from the vice president. they are credible because the methodology is credible, yes. still, despite the d leveraging,

there will be people here that will fail these tests. >> every analyst knows the disorganization. you are on bartered with a wealth of information. you have to sort out what they has done what -- you are bomba rded with a wealth of information. the disclosure process, what have you got? >> it is going to be so complex. yesterday to put out the template. but it is over the process behind this. the banks themselves will only. get a partialset of results before the market does it could be a short space between that and when the market gets the full set of results on friday at the end of october. results -- the stress tests are based on the year and books. then you have the capital raised through the end of this year. given them a lot of time. there will be a lot of dialogue between the banks and the ecb. >> there have been big write-downs. it is taking the pain up front. >> they have been.

you will not get that shortfall until all of the journalists and analysts have spent 48 hours breaking down who needs to raise what. twobanks need -- have weeks. to submit plans october is going to be a very busy month. 9 >> no rest for the wicked. >> manus cranny. >> i am not going to madrid. sqaure to do bank stress tests. we have other breaking news. let's talk about electrolux, the world's number two goods maker. their earnings beat analysts estimates. and revenues were up. the u.s. is the critical market for them. let's say the second quarter, they actually see 2014, u.s. market growing by 4%.

that is in line. beatperating profit estimate. 1.7 billion kroner. >> look out though for ericsson. that is the wireless network or via. second-quarter sales and profit manager beat analyst estimates. volvo called down 5%> . asia truck demand up six percent. north america up 16%. going great guns in north america. europe orders are falling nine percent overall. out look may keep the same but there is concern regarding volvo. electrolux just 1%> >> we will take one percent where it is. the micex is still down.

we will see how these markers play out to the rest of the morning. equity futures slightly lower. we look at the prospects for the erlaysian airlines re-insur after the break. the impact "on the move." ♪

you are welcome back to "countdown." >> let's get you a quick bit of

breaking news because we have had news from the russian news agency saying that the rea intist area, the a eastern ukraine, they are ready daya two for four cease-fire for an investigation. the investigation surrounding the malaysian airline which was shot down, thought by russian separatists. the separatist say they did not see a weapon. that is what is thought to have shot down the -- >> that is the accusation that they had conflict with ukrainian forces where it said that is where they gained access to this surface-to-air defense -- >> ground to air missiles. supplied potentially by russia. russian separatists denying they shut it down. move the story back to

another part. about companies involved. leadnz is said to be the liability re-insurer on the malaysian airlines passenger jet shot down over ukraine. hands nichols joins us. fill me in. where are we going with this piece of the story? thehat is what you said, cease-fire is so important. you can have an independent investigation into the cause of the accident. that has serious applications on the insurance side, because it is allianz that is the lead ensure, re-insurer for this. but atrium would pay the claims if it is due to war. this committee that everyone is calling for has serious applications. >> and thank you very much, indeed. all of that news and allianz.

the stock is "on the move." up next, for all the news that matters. ukraine. remember israel and as a. -- and gaza. pack and a moment. -- back in a moment. ♪

." welcome to "on the move i am jonathan ferro at bloomberg psych orders in europe. we are moments away from the start of european trading in europe. escalating geopolitical risk after a malaysian jet was shot down after eastern ukraine. we will get the latest from ryan chilcote on the ground in kiev. european futures pointing lower. it is about geopolitics but not .ust about that flight it is also about israel. .et's get over to elliott what are you watching? >> this morning it was allianz at the open, the lead reinsurer

for malaysian airlines. if it is considered to be an act taking thoseuld be claims. tony abbott has just talked about the need for russia to allow a full investigation. that investigation will have serious consequences. elliott? thanks. soldiers, tanks and bulldozers have moved into the gaza strip from israel after 10 days of airstrikes failed to quell rocket fire from militants in the gaza strip. prime minister netanyahu says the mission is to destroy tunnels that allow militants to try to infiltrate israel and restore quiet to the communities of israel from that rocket fire. all the details in about 15 minutes. >> thank you very much. the market will be trading on headlines throughout the morning. it is about geopolitical risk. markets just opening right now. manus cranny at the touchscreen.