European stock markets posted sharp losses on Monday as tensions in Ukraine escalated over the weekend with the U.S. and its allies confronting Russia about its latest move to occupy the country. Russia’s President Vladimir Putin received parliamentary approval to use armed forces in the country and Western powers demanded that Russia withdraws its forces from Ukraine’s Crimean region and threatened to isolate Putin and punish his nation’s economy. Tensions remained on Monday and Russia and Ukraine were the main focus in Monday’s trade on all global stock markets.
Russia’s MICEX index XX:MICEXINDEXCF -10.79% tanked 11% to 1,288.81. Meanwhile, the ruble USDRUB -0.68% dropped to a record low against the dollar and euro, after Russia’s central bank unexpectedly raised its interest rate to 7% from 5.5% in response to recent “increased volatility” in financial markets. In Ukraine, the UX index gave up 12.% to 987.96, according to the Ukrainian Exchange website.
The Stoxx Europe 600 index XX:SXXP -2.27% slumped 2.3% to close at 330.36, ending at the lowest level since mid-February.
The FTSE 100 index of leading British shares closed down 1.5 percent at 6,708.35 while the CAC-40 in France fell 2.7 percent to 4,290.87. The retreat on Germany's DAX was even greater — largely because the country is so reliant on Russian gas — with the index ending 3.4 percent lower at 9,358.89.
Tokyo's Nikkei 225 index dropped 1.3 percent to 14,652.23 while Hong Kong's Hang Seng fell 1.5 percent to 22,500.67. China's Shanghai Composite Index bucked the trend, adding 0.9 percent to 2,075.23 despite a survey showing manufacturing weakened in February and employers cut jobs.
Wall Street took a hit too, with the Dow Jones industrial average down 1.1 percent at 16,142 and the broader S&P 500 index 0.9 percent lower at 1,842.
Meanwhile, gold futures rallied by more than 2% on Monday to close at their highest level since late October as crude prices rose more than $2 a barrel moving above $104 US per barrel.