European stocks sink to 9-month lows as Russia invades Ukraine

The UK's commodity-heavy FTSE 100 dropped 3.1% - the smallest decline among local indexes - as a surge in oil prices helped limit losses. A gauge of volatility in euro zone equities crossed 40 points for the first time since June 2020.

European stocks plummeted to nine-month lows on Thursday, with banks, automakers and travel sectors bearing the brunt after Russia launched an all-out invasion of Ukraine.

The pan-European STOXX 600 index tumbled 3.8%, accelerating losses by early noon trading to hit its lowest since May 2021. Investors globally scurried to the relative safety of gold and government bonds, while dumping equities after Russian forces invaded Ukraine by land, air and sea in the biggest attack by one state against another in Europe since World War Two.

U.S. President Joe Biden and other Western leaders promised tough sanctions in response. European banks most exposed to Russia, including Austria's Raiffeisen Bank, UniCredit and Societe Generale, slumped between 10.8% and 19%, while the wider banking index fell 7.5%.

Automakers, travel & leisure and financial services were among the other top decliners, falling between 4.9% and 6%. "There's no denying that it puts pressure on supply chains and the likes of the German industrial complex for their energy needs," said Keith Temperton, sales trader at Forte Securities.

"We haven't seen such a confluence of factors like sky-rocketing commodity prices and potential stagflationary scenarios. It's the worst possible recipe for stocks." The STOXX 600 is now more than 10% off its January record high, marking what is known as "correction territory."

The German DAX sank 5.2% to its lowest in nearly a year, leading declines among regional indexes on concerns over the country's heavy reliance on energy supplies from Russia. The UK's commodity-heavy FTSE 100 dropped 3.1% - the smallest decline among local indexes - as a surge in oil prices helped limit losses.

A gauge of volatility in euro zone equities crossed 40 points for the first time since June 2020. Europe's oil & gas index slipped 0.3%, falling the least among sectors, as oil prices surged over 8%, pushing Brent crude past $105 a barrel for the first time since 2014. The sector remains Europe's top performer this year with a 7.5% gain.

"Whether there will be a full-blown war or not, the simple strategy is to bet on a spike in inflation," said Yuan Yuwei, partner, Water Wisdom Asset Management in Hangzhou. "That means buying oil and agricultural products, and shorting consumer shares and U.S. growth stocks."

In a sea of red, defence stocks were a bright spot, with UK's BAE Systems, Germany's Rheinmetall and France's Thales gaining between 2.7% and 4.2%. Meanwhile, a European Central Bank policymaker Yannis Stournaras said the central bank should continue its bond-buying stimulus programme at least until the end of the year and keep it open-ended to cushion the fallout from any conflict in Ukraine.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)