Europe close: Stocks reel as Ukraine-Russia tensions rise, Russia's RTS walloped
European shares took a big hit at the start of the week with Russian issues coming under acute selling following a report, later denied by Ukrainian officials, that Russian military had destroyed two armoured personnel carriers on its territory.
"A conflict in eastern Europe now looks very likely, and as a result markets remain firmly under pressure," IG chief market analyst Chris Beauchamp explained.
"After the losses last week we saw an attempt at a recovery early on in the session, fuelled by hopes of a Putin/Biden summit later in the week, but once cold water was poured on that idea and news came through of an actual clash between Russian and Ukrainian troops the market went firmly back into ‘risk off’ mode."
The pan-European STOXX 600 finished down 1.30% at 454.81, after a rising almost 0.50% at the start of trading, alongside a 2.07% decline for Germany's Dax to 14,731.12 while the FTSE Mib erased 1.72% to 26,050.03.
Moscow's RTS index plummeted by 13.21% to 1,207.50 with the US dollar advancing 1.6% to 78.73 against the Russian rouble.
Bolstering investor sentiment early on, overnight the French president, Emmanuel Macron said Vladimir Putin and Joe Biden had agreed to attend a summit aimed at de-escalating the crisis, but Moscow later said there was no concrete arrangements for talks.
Russian foreign minister Sergei Lavrov and his US counterpart however were scheduled to meet on Thursday and talks were scheduled to take place between Moscow, Kiev, Paris and Berlin to try and reinstate a cease-fire in Ukraine's Donbass region.
An extraordinary meeting of Russia's security council was also convened, for Monday, with a petition for Moscow to recognise the independence of the two breakaway republics in eastern Ukraine on the table.
On the economic front, Eurozone growth rebounded strongly in February, a key survey showed, but costs pressures continued to mount.
The flash IHS Markit Eurozone PMI Composite Index was 55.8 in February, compared to 52.3 a month earlier. The reading, a five-month high, was the largest monthly gain since March 2021.
The strong performance was attributed to the easing of pandemic restrictions, which boosted demand for travel, tourism and recreation, IHS Markit found.
In equity news, airline stocks were all lower as hopes that the Ukraine standoff could be ended fizzled out. East European airline Wizz Air, British Airways owner IAG, Lufthansa and budget carrier Ryanair all gave up early gains.
Shares in French car parts group Faurecia dropped despite forecasting a rise in annual sales, adding that it expected semiconductor shortages to ease from the second half of 2022.
Worldline fell 3% after the payments company entered exclusive talks to sell its TSS terminals business to US financial company Apollo Funds in a deal potentially worth around €2.3bn.
French vaccine maker Valneva gained 2% after saying its Scottish unit has received a grant of up to £20m to partly fund the research and development of manufacturing its Covid-19 vaccine VLA2001.