Peter Nurse

Investing.com — European stock market slump after Russian President Vladimir Putin sent troops to eastern Ukraine, recognizing two separatist regions as independent republics. This brought the country closer to war.

By 3:35 AM ET (0835 GMT), the in Germany traded 1.6% lower, the in France dropped 0.9% while the U.K.’s fell 0.5%.

The Ukraine border tensions have put global stock markets on edge over the past week. Putin’s decisions to recognize two breakaway regions in eastern Ukraine as independent and then deploy troops in what Moscow called a peacekeeping operation has prompted investors to shun risk, causing a broad-based selloff.

U.S. President Joe Biden immediately signed an executive ordering to stop any U.S. businesses from the region’s breakaway. Linda Thomas Greenfield, U.S. Ambassador to the United Nations said Tuesday that additional sanctions were to be issued after an urgent meeting of the Security Council Monday night.

European Union ambassadors meet later Tuesday to discuss a plan for sanctions in response to Putin’s move, while Britain has said it too would sanction Russia.

Corporate sector HSBC Holdings PLC (LON:) stock fell 1.2%, with the banking sector hit hard on fears that sanctions on Russia could result in an increase in the sector’s bad loans. HSBC’s focus is Asia and it reported a $18.9 Billion pretax profit in 2013, up from its $8.8B revenue the previous year. After completing the $2 billion buyback programme, HSBC will buy back as much as $1 billion in its shares.

SAS stock fell 4.6% following the announcement by the Scandinavian airline SAS (ST.) that it would seek capital raising after it reported a larger loss of 2.60 Billion Swedish crowns ($275 Million) in the quarter ended November-January. This was more than the loss the airline suffered a year ago.

Investors will pay attention to the German release on Tuesday. Positive signs of an economic recovery could encourage the European Central Bank to unwind post-pandemic stimulus faster than expected, although the uncertainty sparked by the situation in Ukraine could stay the central bank’s hand.

After Russian troops entered eastern Ukraine on Tuesday, crude oil and gas prices shot up. This raises the possibility of disruption to energy supply if U.S. or European governments impose oil sanctions against Moscow.

Futures were trading 4.7% higher at $94.47 per barrel by 3:35 AM ET. Contracts rose 3.2% at $95.32, after climbing earlier Tuesday to the highest point since September 2014. They also increased 4% to $2.9245 per gallon.

Also, the price of gold rose 0.3% at $1,905.85/oz while it traded 0.1% lower at 1.1314.