By Sruthi Shankar

(Reuters) -European share prices fell seven months ago, but they recovered some of their losses due to the threat of severe sanctions from Russia. Russia has sent troops into two separatist regions in eastern Ukraine.

Pan-European index lost 0.6% in the fourth consecutive session. In early trading, the benchmark dropped as high as 1.9%. This puts it in correction territory from its record-setting peak.

German indices are seen to be more susceptible than others regional indices because of their heavy dependence on Russian gas supplies. The index also lacks energy companies. It was the worst hit, dropping 0.9%.

While the wider euro-zone stock index fell 0.7%, Britain’s commodities-heavy gauge dropped 0.4%.

Following President Vladimir Putin’s recognition of two separatist regions in Ukraine, and signing a decree to place Russian troops there, both the United States (and its European allies) are set to issue harsher sanctions to Russia.

Fears of disruption caused oil prices to rise. They reached their highest level since September 2014. It is now heading towards $100 per barrel.[O/R]

Although oil & gas stocks surged 1.7%, investors feared stronger commodity prices would stoke more inflation in Europe.

Russia is keen to minimize disruption. This is why there has been a muted reaction in the markets,” stated Seema Shah (global chief strategist, Principal Global Investors).

After reaching 39 points in the last session, the common indicator of volatility across Euro Zone equities fell to 39. This is its lowest level since June 2020.

As investors reduced their expectation of a rise in central bank rates in 2022, the Eurozone banks declined 1.0%. The market is pricing in around 95% of an expected 10bps increase in July and 40bps annual increases. [GVD/EUR]

Shah indicated that she is skeptical about an ECB rate rise this year due to concerns regarding the strength of Europe’s economy as well the additional complications arising from Russia-Ukraine.

Volkswagen AG (OTC) surged 9.1%, and Porsche SE rose 10.5% after news that both companies were in advanced talks about an IPO.

French card and gift vouchers provider Edenred The (PA) rose 6.1% following the announcement of a record-breaking core profit for full-year.

Fresenius Medical Care, a German specialist in dialysis (NYSE:), fell 7.1% following a missed estimate for full-year earnings due to the COVID-19 pandemic. ()