Europe midday: Travel stocks out of favour on Russia/Ukraine tensions

European shares were still sharply lower on Monday amid fears Russia could invade Ukraine at any moment, with travel stocks slumping and oil prices rising.

The pan-European Stoxx 600 index was down 2.54% in early deals, with Germany's DAX and France's CAC 40 off by 3%.

Oil prices hit their highest levels in more than seven years on worries that any invasion of Ukraine could trigger US and European sanctions on Russia and disrupt energy exports. Brent crude was last up more than $1 to above $95 a barrel.

Western leaders are desperate to avoid a war, with German Chancellor Olaf Scholz travelling to the Ukrainian capital Kyiv on Monday and then to Moscow on Tuesday for talks with Russia's Vladimir Putin.

“With the situation between Russian and Ukraine reportedly worsening with the increasing possibility of an invasion, diplomatic solutions thus far have had little impact,” said Richard Hunter, head of markets at Interactive Investor.

“In economic terms, while any such invasion would be most acutely felt in Europe, there would likely be wider implications such as the possibility of supply chain restrictions and a further boost to the oil price on lessened supply.”

Comments from San Francisco Federal Reserve Bank President Mary Daly on Sunday appeared to dampen speculation that the Fed could deliver an aggressive 50 basis point rate hike in March to contain inflation. Being too "abrupt and aggressive" with rate increases could be counter-productive, she said.

In equity news, travel stocks were all lower on Russia/Ukraine tensions, with Wizz Air, which focuses on eastern European destinations down more than 9%, British-Airways owner IAG, cruise line operator Carnival and Germany's Lufthansa all marked down.

Evraz, which has steelmaking assets in Russia, saw its shares plummet more than a third.

Shares in Swiss chemical company Clariant fell almost 17.55% after it postponed its annual results as investigators probe whistleblowers allegations that some staff manipulated accounts in 2020 and 2021 to help meet financial targets.

Commerzbank fell 5.7% after Germany's finance minister said the government would not keep its stake in the lender in the long run.