By Josie Cox

European markets shrugged off geopolitical tensions anew Monday, despite the stresses between Russia and the West intensifying over the weekend, and violence escalating in the Middle East.

The Stoxx Europe 600 added 0.1% in early trade in line with most other major indexes in the region. Moves in currency markets were muted too, with the euro trading at 1.3542 against the U.S. dollar. The yen was marginally weaker on the day against the dollar, at 101.24.

"Markets are likely taking the view that increased pressure from the West will force a conciliatory response from Russian President Vladimir Putin," BNP Paribas strategists wrote in a note. UBS economist Paul Donovan, meanwhile, wrote that while investors were likely to remain risk averse, "there is no obvious trigger for an escalation of investor concerns just yet."

If the situation in Russia and tensions in Gaza do exert market influence, it will likely be reflected in energy prices, Mr. Donovan added.

On Monday, however, Brent crude was trading little changed at $107.19 a barrel. Gold edged up marginally to $1,311.50 an ounce.

Over the weekend, the U.S. leveled its most-explicit allegations yet of Russia's involvement in the downing of a Malaysia Airlinesflight last Thursday that left 298 people dead, and subsequent efforts to conceal evidence.

European leaders threatened broad new sanctions against Moscow, departing from their initially muted reaction and marking a turning point in the standoff between the West and the Kremlin.

The ruble dipped against the euro and dollar, but losses on Russia's Micex index and the dollar-traded RTS Index were limited to around half a percent Monday.

A flare-up in unrest across the Middle East, appeared to leave many investors largely unshaken too. Israel said 13 soldiers were killed and Gaza officials said 96 Palestinians were killed Sunday, including 60 in the Gaza City neighborhood of Shajaiyeh where the battle of the tunnels was fought.

Elsewhere, the corporate earnings season moved into focus Monday.

Shares in Julius Baer Group AG led the pan-European index, adding more than 8%, after the Swiss bank said that assets under management rose 8% in the first half of this year and announced plans to take over Israeli lender Bank Leumi's Swiss private banking operation.

In the U.K. engineer contractor Babcock International Group PLC rose to the top of the FTSE 100 after the group said that its order book for the coming year had risen to GBP13.5 billion pounds ($23.1 billion). Shares in retailer Tesco PLC rose too, even though the company warned that trading conditions are more challenging than previously anticipated.

Write to Josie Cox at josie.cox@wsj.com

(END) Dow Jones Newswires

July 21, 2014 04:14 ET (08:14 GMT)

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