European stocks sank this morning as Western countries imposed tough new sanctions on Russia following its invasion of Ukraine, while soaring oil prices fed into fears of runaway inflation.
Shares in London were down 1%, while the Paris and Frankfurt markets were 2% lower in early trade.
The Dublin market opened 0.7% lower this morning with AIB, Bank of Ireland and Ryanair seeing big losses.
Crude oil jumped almost 5% while Russia’s rouble plunged nearly 30% to a record low after Western nations imposed sanctions including blocking big Russian banks from the SWIFT global payments system.
European banks most exposed to Russia, including Austria’s Raiffeisen Bank, UniCredit and Societe Generale, dropped between 6.3% and 15.8%, while the wider euro zone banking index fell 5.2%.
Adding to nerves, President Vladimir Putin put Russia’s nuclear deterrent on high alert in the face of a barrage of Western reprisals.
Goldman Sachs forecast European headline inflation to rise sharply to 5% in 2022 and said the crisis could shave off as much as 0.4% of euro area GDP this year.
Shares of London-listed energy major BP slid 4.1% after the biggest foreign investor in Russia said it was abandoning its stake in state oil company Rosneft at a cost of up to $25 billion.
France’s Renault, which controls Russian carmaker Avtovaz, fell 6.9%.
But defence company Rheinmetall shot up 43% after German Chancellor Olaf Scholz said the country would sharply increase its spending on defence to more than 2% of it seconomic output.