By Gina Lee

Investing.com – Asia Pacific stocks were mostly down on Friday morning, extending a selloff as the ongoing tensions over Ukraine decreased investors’ risk appetite.

Japan’s was down 0.38% by 9:18 PM ET (2:18 AM GMT). The data released earlier today showed that the rose 0.2% year on year, and the rose 0.5% in January.

South Korea’s was down 0.25% and in Australia, the fell 0.56%.

Hong Kong’s was down 0.34%.

China’s edged up 0.11% while the fell 0.42%.

Russia has flatly denied the U.S. But, the Ukrainian government forces as well as the Moscow-backed separatists involved in conflict in Eastern Ukraine accused one another of breaking ceasefire rules.

Due to tensions in Ukraine, and tighter U.S. Federal Reserve policy, global shares could experience a second week with losses. The market could see volatility rise due to the expiration of approximately $2.2 trillion in option contracts.

The tension in Ukraine has prompted some investors to relax their expectations that the Fed might raise its interest rates. Investors are still weighing the effect of tighter money policy on economic recovery.

“We’ve been calling for a long time for increased volatility, but when it finally comes it’s nerve-wracking for everybody,” BMO Family Office LLC deputy chief investment officer Carol Schleif told Bloomberg.

“It’s important to remember that the Fed isn’t going to start pulling back its support for the economy, either in terms of the balance sheet purchases or interest-rate raises, if they weren’t trying to cool a very strong economy,” she added.

On Thursday, James Bullard, President of Fed Bank of St. Louis, stated that in order to bring down inflation, the central bank could need to overshoot a neutral interest rate. He sees it as about 2.2%. Loretta Mester, President of Fed Bank of Cleveland, stated that she is in favor of raising interest rates for March. She also supports tightening monetary policies at a quicker pace to reduce inflation.

Charles Evans and Christopher Waller will also speak later that day at the U.S. Monetary Policy Forum.

U.S.-China tensions were also in the spotlight, with China’s Alibaba (NYSE) Group Holding Ltd.

However, global markets’ focus remains squarely on Eastern Europe.

It is “hard to trade a headline-driven market at the best of times, but one where we get such a contradictory narrative, there is so much noise. Volatility measures should stay elevated,” Pepperstone Financial Pty. Chris Weston, head of research, stated in a note.