Europe open: Stocks slump, euro hits 20-year low as energy crisis deepens

European stocks and the euro slumped in early trade on Monday as the energy crisis intensified.

At 0845 BST, the benchmark Stoxx 600 index was down 1.4%, while Germany’s Dax and France’s CAC 40 were 2.7% and 1.9% lower, respectively. At the same time, the euro fell to a 20-year low against the dollar, trading below 0.99, after Russia indefinitely suspended gas flows through the Nord Stream 1 pipeline to Germany, sending gas prices surging.

Gazprom said on Friday that the decision not to resume gas supply was due to an oil leak detected at the last compressor unit still in operation at the Portovaya compressor station. It said the repairs could only be carried out "in conditions of a specialised repair shop".

However, the statement from Gazprom quickly followed an announcement from the G7 that it would be implementing a price cap on purchases of Russian oil.

MUFG Bank said: "The Gazprom announcement appears to be more a form of retaliation from Russia as it continues to hit back against sanctions imposed by the West.

"Russia’s ongoing weaponisation of energy supplies continues to increase downside risks for European economies and the euro. It has been estimated that if gas supply from Nord Stream does not resume, it will remove 30mcm/d over the next twelve months. The developments will re-heighten fears over greater demand destruction from higher prices and from the higher risk of rationing over the winter period."

In equity markets, German utilities Uniper and RWE slid 11% and 4%, respectively.

In UK markets, Countryside Partnerships rallied after agreeing to be bought by housebuilder Vistry in a £1.25bn deal.