US stocks fell amid concerns over the build-up of Russian troops on Ukraine's eastern border.

Russia's decision to bolster their military presence along the border with Ukraine looks set to have knockdown effect on the markets, with investors in the US and Europe worried about a possible invasion.

The Russian army began military exercises involving more than 100 aircraft near the border with eastern Ukraine on Monday while a further 8,000 troops were deployed over the last couple of days, adding to the 12,000 forces that were already present on the territory.

Russia's increased military presence comes a week after the US and the European Union decided to go ahead with increased economic sanctions on the country for its support of pro-Russian separatists in the regions of Donetsk and Luhansk.

Alpari UK analyst Craig Erlam said "if Russian troops cross the border, with Putin justifying the actions as an attempt to protect Russian speaking civilians, the situation could escalate quite rapidly and force Europe and the US to take a stand".

"This is the biggest fear for investors right now and explains why we're seeing more risk aversion in the markets today, following the late sell-off in the US last night," he added.

On a brighter note, the Commerce Department said the US trade gap narrowed to $41.5bn in June from $44.7bn in May, beating the forecast for an increase to $44.9bn.

Capital Economics said the decline was likely to result in second-quarter gross domestic product growth being revised higher from the initial estimate of 4.0% annualised to about 4.2%.

Time Warner slides after Fox bolts

Time Warner declined after Rupert Murdoch's 21st Century Fox withdrew its $75bn offer. Time Warner also reported earnings that beat estimates and said it plans to buy back $5bn of its shares.

Walgreen Co. slumped after the biggest US drugstore chain said it will pay about $5.29bn in cash plus $10bn in Walgreen shares for the remaining 55% stake in the UK's Alliance Boots that it doesn't already own.

Groupon retreated as the voucher company forecast third-quarter earnings that fell short of market expectations.

The US 10-year Treasury yield fell three basis points to 1.34%.

Brent crude futures rose 0.447% to $105.09 per barrel, according to the ICE.

RD

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