Europe close: Stocks end lower after session of whipsaw trading, energy price surge

Stocks displayed very high volatility at the start of the week on the back of headlines of a possible ban on purchases of Russian energy by the US and Europe that triggered a spike in oil futures and a drop in the German Dax to 16-month lows.

Market sentiment was later bolstered by news that the foreign ministers of Russia and Ukraine would meet later in the week and of a ceasefire offer from Moscow, with the latter subject to several conditions. Talks between delegations from the two countries were also set to take place on Monday.

In the background meanwhile, investors were also keeping a close eye on the risk of possible debt defaults by Russian corporates on their foreign currency denominated debt.

The Stoxx 600 declined 1.1% to 417.13, together with a 1.98% fall for the German Dax to 12,834.65 and a 1.36% retreat on the FTSE Mib to 22,160.28.

"Investors continue to fret about the war, oil prices, more sanctions, monetary tightening and a possible recession," said IG chief market analyst Chris Beauchamp.

"[...] Crises used to come along one or two at a time, but now they have come all at once, and that makes it hard for markets to price the outcomes."

Mirroring the swings in the Continent's major equity indices, the VStoxx index of volatility on the Euro Stoxx 50 slipped 3.1%, after at one point in the session trading up by 20%.

Front month Brent crude oil futures gained 5.42% to $124.51 a barrel on the ICE, but had also spiked earlier to reach $139.13.

The US House of Representatives was reportedly exploring legislation that would ban imports of Russian oil and energy products, which some analysts said generated about a third of Moscow's tax take.

Germany Chancellor Olaf Scholz however poured cold water on the possibility of such a move by the European Union in the near term, citing European energy security.

His finance minister, Christian Lindner, said that option was on the table, but "at this point in time, however, it seems advisable for the sustainability of the sanctions against Vladimir Putin not to take this step ourselves."

Euro/dollar slipped 0.68% to 1.0854.

In a telephone interview with Reuters, Kremlin spokesman, Dmitry Peskov, said an immediate ceasefire was possible if Kyiv officially adopted neutrality in its constitution, recognised Crimea as Russian territory, the independence of its two breakaway provinces and halted military actions.

On the corporate front, Russian gold miner Polymetal edged up, even after the London Stock Exchange cancelled some trades in the stock that had seen in its price rocket.

Miners Glencore, BHP, Antofagasta and Anglo American made strong gains on higher metals prices.

The war in Ukraine continued to hit airline stocks, with Wizz Air and easyJet falling by 7% and 8%, respectively, as they braced for higher fuel costs and lower passenger numbers.