The rising threat of war between Ukraine and Russia spooked markets and sent investors scurrying for relative safety on Monday, pushing stocks down sharply and lifting gold to a four-month high.
With Russian troops already on Ukrainian soil after an incursion into Crimea, comments over the weekend from President Putin that he had the right to invade the rest of the country were treated as a declaration of war by Kiev.
Geopolitical ripples from those statements, which included condemnation from the Group of Seven major industrialized nations, fanned through markets, hitting Russian assets the most and forcing the Russian central bank to aggressively raise interest rates.
Russia's stockmarket .MCX nosedived 9 percent at the open on Monday while the rouble fell 2 percent to record lows against the dollar and the euro, and the central bank dramatically lifted its key lending rate by 1.5 percentage points to 7 percent at an unscheduled meeting.
No major regional bourse escaped the aggressive selling, with all down more than 1 percent and Germany's DAX .GDAXI particularly hard hit, tumbling 2.5 percent.
That had followed overnight weakness in Asia, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down 0.9 percent and Japan's Nikkei 225 .N225 skidding 1.3 percent, while futures for the U.S. Standard & Poor's 500 slid 0.9 percent off Friday's record high.
"We can expect some very sharp moves in the ensuing couple of days as markets and world leaders look to establish just how much of a threat there is to not only to stability in the area but stability across Europe," said James Hughes, chief market analyst at Alpari UK.
Chief beneficiaries of the market-wide flight from risk were gold, German benchmark debt and the Japanese yen and other currencies perceived as safe-havens in times of heightened volatility, while oil was supported by the demand outlook.
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