Travel shares plunge as Ukraine tensions hit stock markets

Europe's main stock markets sank on Monday on rising tensions over Russia's military build-up on Ukraine's border.

In early afternoon trading, the FTSE 100 of leading companies pared earlier steep losses but was still 1.6% lower, while markets in Paris and Frankfurt were more than 2% down.

Shares linked to travel and tourism - BA owner IAG, Wizz, Tui and cruise firm Carnival - fell between 6% and 9%.

London-listed Russian mining company Evraz was hardest hit, falling 30%.

The losses in Europe followed steep falls on stock markets in Asia.

Oil initially rose sharply with Brent crude topping $95 (£70) per barrel, stoking fresh inflationary worries, although the price has eased back slightly.

With oil demand high as global economies emerge from lockdown, there are fears a war or severe sanctions on Russia will cut supplies, sending the price above $100 a barrel, something not seen since 2014.

"Just as the storm of Covid appeared to be receding, the growing expectation of an invasion of Ukraine is the fresh threat now unnerving investors, with confidence plunging in many parts of the world," said Hargreaves Lansdown analyst Susannah Streeter.

She added: "With worries that inflation is already running far too hot, the possibility Russia troops could move across the border has led to another surge in the oil price. Energy markets are clearly on edge and if supplies are threatened there is a risk oil will shoot up even higher."

Analysts at Capital Economics estimate war or sanctions could add two percentage points to inflation in Europe, forcing central banks to lift interest rates faster and further.

"Over the longer term, whether Russia ends up invading or not, this geopolitical flare-up is likely to speed up the process of Russia's decoupling from the West," Capital Economics said in a research note.

Moscow has amassed an estimated 100,000 troops along Ukraine's border but denies any intent to invade.

Despite this, more than a dozen countries have urged their citizens to leave Ukraine, with the US saying Moscow could begin an attack "at any time".