Global equities dived Monday after the United States warned that Russia could attack Ukraine within days, while oil briefly hit eight-year peaks on fears of a conflict that would hit supplies.
Frankfurt and Paris stock markets each sank by as much as 3.5 percent in late morning deals, while London lost more than 2.2 percent at one stage.
Asia also nursed heavy losses, mirroring Wall Street’s sharp sell-off on Friday.
World oil prices paused after earlier striking their highest levels since 2014 on deepening worries of a conflict sparked by key crude producer Russia.
Stock markets are getting pummelled as everyone prepares for a possible Russian invasion of Ukraine,“Stock markets are getting pummelled as everyone prepares for a possible Russian invasion of Ukraine,“
OANDA analyst Craig Erlam told AFP.
"The threat has been apparent for weeks but the warnings of recent days make clear that diplomatic efforts are not working and there's now a very real risk of an imminent move from the Kremlin."
In the face of uncertainty, investors are dumping riskier assets like equities, while key Russian exports including also gas have been well supported, he added.
Russia's main stock market was down more than four percent while the ruble fell against the dollar.
Russian President Vladimir Putin has dismissed calls by US counterpart Joe Biden and others to pull back.
Governments have told their citizens to leave Ukraine and US national security adviser Jake Sullivan warned last week that an invasion could begin "any day now" and would likely start with "a significant barrage of missiles and bomb attacks".
German Chancellor Olaf Scholz was preparing to visit Kyiv and Moscow to try to head off the crisis.
"The prospect of war is rarely good for stock markets, and so the new trading week has begun on a bad note across Europe and Asia as investors fear a physical battle between Russia and Ukraine," said AJ Bell analyst Danni Hewson.
$100 oil?
The crisis comes amid a pick-up in crude demand as economies reopen after the coronavirus pandemic and people return to a more normal life.
In earlier Asian deals, Brent had climbed as high as $96.16 and WTI crude to $94.94 per barrel, stoking renewed concern over elevated inflation.
“Russia is the world's second-largest exporter of crude oil and the largest exporter of natural gas,“
noted Commerzbank analyst Carsten Fritsch.
"If Russia invades Ukraine, crude oil and natural gas prices can be expected to surge significantly. In this case, Brent would probably exceed $100 per barrel."
Europe has for months already suffered from soaring natural gas prices, which have fuelled rocketing domestic energy prices and sparked decades-high inflation.
"In the event of a Russia-Ukraine escalation we could be seeing a significant increase in domestic energy prices since much of Europe is heavily reliant on Russian oil and
gas supplies," said XTB analyst Walid Koudmani.
"As energy prices have been a key contributor to the recent record levels of inflation, a further increase could spill over into the majority of the economy and potentially hinder an already fragile post-pandemic economic recovery."
