FTSE 100 almost wipes out losses as surging oil price boosts Shell

It's time to close the blog, thank you for sticking with us today. Before you go, check out the latest stories from our reporters:

• Russia pulls down the cyber iron curtain
• 'Total war' effort needed to cope without Russian oil and gas, expert warns
• Tax deal lets Sanjeev Gupta keep his steel plants
• Gold hits $2,000 amid market scramble for precious metals
• White House talks to Venezuela in dash to replace Russian oil

Russian internet users have raced to download virtual network apps that let them bypass internet restrictions as the Kremlin blocks social media and Western news organisations. James Titcomb reports:

Downloads of the top five virtual private network (VPN) apps in Russia climbed by 170pc in the last week, according to Sensor Tower, a company that tracks the popularity of apps. Around 2.7m users installed VPNs in the seven days to March 6, up from 1m in the previous week.

Russia’s communications regulator, Roskomnadzor, blocked Facebook and Twitter on Friday night. It claimed it had cut access to Facebook due to 26 cases of “discrimination” against state media.

VPNs allow users to bypass internet controls by scrambling their traffic and sending it through separate internet addresses. They are widely used in countries that restrict access to the internet, although regimes have sought to limit their use by blocking downloads.

Russia banned many of the world’s most popular VPNs in a series of crackdowns last year, but alternatives still led rankings on download stores on iPhones and Android devices last week.

Spectris, a maker of precision and test equipment, has ended negotiations for a £1.8bn takeover of microscopes producer Oxford Instruments citing the economic uncertainty caused by the war in Ukraine.

Spectris said that while it still sees a compelling rationale for the acquisition, market conditions mean the deal wouldn’t be in shareholders’ best interest. 

“The advent of war in Ukraine, with its deplorable events, has created significant uncertainty in global economic conditions” and there’s no clear end in sight, the FTSE 250 group said.

The company said last week it was in talks to buy Oxford Instruments for £31 a share in cash and stock. Spectris said it has no businesses in Ukraine.

The FTSE 100 managed to claw back some of its earlier losses but still closed in the red and at a six-month low.

London's leading index shed 0.4pc to 6,959 after falling as much as 2.7pc in the morning.

Danni Hewson at AJ Bell commented: "Investors are struggling to price in what’s next, volatility looks set to remain a constant and nerves will be tested.

"There are winners in today’s game, and there will be some raised eyebrows at the surge in share price of three of the FTSE 350’s big gainers. Evraz, Polymetal and Petropavlovsk all enjoyed a double digit rebound as some investors 'bought the dip'. Whatever your opinion on this twist, the game is far from over and buyers could find themselves stuck with a hand that’s not worth what they gambled it might be.”

United Airlines has said it has indefinitely suspended two flights to India after it halted flights over Russia last week.

The Chicago-based airline said last week it had stopped service between San Francisco and Delhi and between Newark and Mumbai. It still plans to fly to Delhi from both Chicago and Newark.

The Biden administration last week joined the EU and Canada in banning Russian airlines from US airspace.

UBS, the world’s biggest wealth manager, has revealed that it has $10m (£7.6m) worth of loans outstanding to oligarch clients who have been targeted by Russia sanctions. Lucy Burton writes:

The Swiss banking giant also told investors that extra sanctions could unexpectedly increase its exposure to Russia, which it said stood at $634m at the end of 2021 out of a total emerging market exposure of $20.9bn. This does not include $51m of assets in its Russian subsidiary or a $200m exposure to Russian assets used as collateral in loans to wealthy clients.

Switzerland’s banking sector has long proved popular for oligarchs, with private bankers telling Bloomberg that wealthy Russians likely have more than $100bn held across the country’s lenders.

Official data shows that Russian residents and companies held $11bn in Swiss bank accounts as of September, more than double the estimated $5bn held in the UK. However, much of this money will now be frozen after Switzerland broke from its traditionally neutral position on international relations to impose EU sanctions on Russian officials and companies following Vladimir Putin’s invasion of Ukraine.

It's an eventful day for commodities, with nickel surging as much as 62pc in one of the most extreme price moves ever seen on the London Metal Exchange.

Nickel, used in stainless steel and lithium-ion batteries, added more than $17,000 to trade at an almost 15-year high above $40,000 a ton, in the biggest-ever daily dollar gain in the 35-year history of the contract. 

The metal’s surge builds on a 19pc gain seen last week as banks cut exposure to Russian commodities suppliers and major shippers steered clear of the country’s key ports. Now, as the US weighs a potential ban on Russian oil imports, traders are questioning whether industrial consumers will elect to avoid buying other Russian raw materials, even in the absence of direct prohibitions on purchases. 

“Commodity markets are increasingly pricing in a scenario under which a significant portion of Russian supply will be excluded from the market,” Morgan Stanley said in a note. “Prices are likely to remain highly volatile, until the real supply impact becomes clearer and prices can start to settle at a new equilibrium.”

Nickel prices jumped 62% *today* as fears over Russian supplies leave buyers exposed to a historic squeeze https://t.co/Ro17iyQixn#METL pic.twitter.com/QfWcMDtjHQ

— Helen Robertson (@HelenCRobertson) March 7, 2022

That's all from me today – thanks for following along! Giulia Bottaro will take over from here.

Today's volatility isn't limited to equities.

Gold and palladium have both erased their gains after rallying earlier in the day as global markets reversed course.

The precious metal had surged above $2,000 an ounce for the first time since August 2020 as investors rushed to safe-haven assets after the US said it could ban imports of Russian oil.

A ban would further disrupt energy supplies and add to inflationary pressures at a time when price growth is already at its fastest in decades.

But markets calmed after German Chancellor Olaf Scholz made it clear that his country opposed the move.

Gold fell back to $1,971 while palladium, which had earlier climbed 14pc to an all-time high, fell 1.5pc.

Sales of petrol and diesel across the UK jumped in the days after Russia’s invasion of Ukraine amid concerns the conflict and resulting sanctions could spark shortages.

Average fuel sales per petrol station were about 30pc higher on pre-pandemic levels on February 25, according to government data. While this represents a sharp jump, it’s less severe than during the petrol crisis that gripped the country in September.

It comes amid signs that diesel stockpiles are running low, with traders willing to pay a premium to secure immediate supplies rather than wait a month.

Prices of the fuel in France have overtaken those of petrol for the first time in recent years as the crisis in Ukraine continues to rattle markets.

Boris Johnson has said the Government will be setting out a new energy supply strategy in the coming days.

Speaking at a press conference, the Prime Minister warned that Europe could not simply shut down the use of oil and gas overnight but that countries should move together quickly to look beyond Russia for its oil and gas supplies.

Asked whether there would be a European ban on oil imports from Russia, he said: "There are different dependencies in different countries, and we have to mindful of that, and you can't simply close down the use of oil and gas overnight even from Russia.

"We can go fast in the UK... what we need to do is to make sure we are all moving the same direction... and that we accelerate that move and I think that's what you are going to see." 

And it's confirmed – all of the Big Four auditors are pulling out of Russia in response to its invasion of Ukraine.

PwC and KPMG announced yesterday that they were withdrawing from the country, with EY following suit earlier today.

Now, Deloitte has confirmed it will no longer operate in Russia and Belarus, where it has about 3,000 employees.

EY, which said it would separate its Russian business from the wider group, has about 4,700 staff members in Russia. It said it would no longer serve any Russian government clients, state-owned enterprises or sanctioned entities and individuals anywhere in the world.

PwC and KPMG, which both announced similar moves, have around 3,700 and 4,500 in the region respectively.

Oil prices have eased back from their blistering heights after Germany slammed the brakes on talk about a Russia energy import ban.

Chancellor Olaf Scholz said supplies from Russia were of “essential importance” to the European economy, adding that heating, transport and electricity could not be secured otherwise.

Mr Scholz said that while the EU faced an urgent task of finding alternatives to Russian energy supplies, “this won’t happen overnight”. 

He added: “It’s therefore a conscious decision on our part to continue the activities of business enterprises in the area of energy supply with Russia.”

Benchmark Brent crude was trading at around $120 a barrel, having surged as high as $139 earlier in the day.

US stocks have dipped in early trading amid growing fears about inflation, though the sell-off isn't as severe as previously feared.

The S&P 500 slipped 0.2pc and the Dow Jones was down 0.4pc. The tech-heavy Nasdaq bucked the trend, gaining 0.4pc.

European markets were plunged into turmoil this morning after the White House said it was considering a ban on Russian oil imports, sending Brent crude past $130 a barrel and fuelling inflation fears.

But shares have largely reversed course ahead of a round of talks between Russia and Ukraine, though hopes for a diplomatic solution are low.

It seems there's no let-up in the market volatility, with shares reversing their earlier losses just ahead of Wall Street opening.

The FTSE 100, which was down as much as 2.6pc earlier in the day, is now trading 0.4pc higher.

Gains for oil and commodity firms are leading the way, with Shell up 7.7pc while Antofagasta, Anglo American and Glencore all pushed higher.

Defence giant BAE Systems also rose more than 7pc as the drumbeat of war resonates ever louder.

The FTSE 250, which had been even deeper in the red, ticked up 0.1pc. The reversal also spread across Europe, with the benchmark Stoxx 600 index erasing an earlier fall of 3.8pc to trade little changed.

A bizarre glitch in this morning's trading – thought to be a so-called fat finger trade – sent shares in Polymetal International surging 700pc.

The London Stock Exchange has since cancelled all trades in the firm carried out between 8.41am and 9.02am.

Coping without Russian oil and gas would demand an effort “akin to reorganising the economy for total war” by Britain and Europe, an energy expert has claimed.

Matt Oliver has the details:

Ministers should “take no option off the table” – including coal and nuclear power – to ensure the lights stay on next winter if sanctions cut off Russian energy, according to Tom Edwards of Cornwall Insight.

He also called for the UK to set up a “buying cartel” with Europe to purchase as much liquid natural gas (LNG) as possible from other countries.

The comments came as fears of a US-led embargo on Russian oil and gas sent gas prices to new highs.

The UK gas price hit 800p a therm for the first time on Monday, compared with just 40p a year ago.

Gas piped from Russia accounted for 36pc of European supplies in 2021, much lower than the 2.3pc the Government estimates it makes up in the UK. However, the UK price closely follows the European market.

​Read Matt's full story here

Boris Johnson has hinted at a further cut to the grace period for foreign owners of UK property to register their interests in a tightening of sanctions against wealthy Russians.

While the Government plans to give people six months to comply with its new register – already down from the original 18 months – Labour is pushing for a 28-day notice period to prevent people from having time to move assets abroad.

The register is part of the Government’s economic crime bill, which is due to be voted on in the House of Commons today.

Speaking to broadcasters earlier today, the Prime Minister said: “We certainly want to go as fast as possible. There is more to be done.”

Foreign Secretary Liz Truss is due to make a statement on the issue in parliament at 3:30pm.

Shell is said to have started limiting sales of heating oil to some wholesalers in Germany in the first sign that the Ukraine war could spark energy shortages.

The oil giant has reduced spot sales to ensure it can continue to meet contractual obligations amid huge prices spikes and shortages, Bloomberg reports.

German heating oil is nearly identical to diesel in Europe. Prices in this market suggest inventories are running low, with traders willing to pay a sharp premium to get the fuel this month rather than waiting until April.

The war in Ukraine, resulting western sanctions and the threat of retaliation by Vladimir Putin have combined to spark fears of supply disruption and potential energy shortages.

Wall Street is poised to open the week in the red as surging oil prices fuel fears about global inflation.

Futures tracking the S&P 500, Dow Jones and Nasdaq all dropped 1pc, with banks and travel stocks posting the biggest falls.

Brent crude jumped above $130 a barrel amid talk of a ban on Russian oil imports, adding to fears that the war in Ukraine will push prices even higher and dent global economic growth.

Seema Shah at Principal Global Investors predicts that commodity prices will remain high for a long time.

Investors are expecting a prolonged period of market volatility as the devastating and unpredictable conflict in Ukraine continues.

The cost of sanctions, commodity price rises, and the awful prospect of a migrant crisis add up to a heavy impact on the global economy – particularly in Europe – and, across the board, risk asset valuations are likely to continue to weaken.

The hedge against geopolitical risk – and inflation risk – is the commodity trade. Energy prices are currently being dictated by geopolitical risk but, even before the Ukraine crisis, valuations were rising owing to structural shortages in commodities, including natural gas.

Energy consumption fell markedly during Covid but has recovered sharply as the pandemic began to subside and lockdowns eased. Today, production is not keeping pace with rising consumption, in part due to the focus on renewables.

Our view is that, in the longer term and looking beyond wartime market dynamics, commodity prices will remain elevated for a sustained amount of time.

Gold has broken above $2,000 an ounce as investors try to protect themselves from rising inflation and market turmoil sparked by the Russian invasion of Ukraine.

Louis Ashworth has more:

Prices crossed the threshold on Monday morning and now look likely to exceed a record high struck during the early months of the pandemic.

The precious metal, long regarded as a safe haven in uncertain times, reached as much as $2,002 an ounce and remained just above $2,000 in early afternoon trading in London.

Speculators increased long positions on gold for the fourth consecutive week as the conflict between Russia and Ukraine creates further chaos on commodity markets, driving it towards the $2,089 record reached in August 2020.

Other metals have also posted sharp rises as traders re-assess demand and availability.

Nickel traded on the London Metals Exchange reached $35,000 a tonne for the first time since 2014, while aluminium hit $4,000 a tonne, the highest since the financial crisis.

​Read Louis' full story here

After dropping sharply in early trading, the FTSE 100 has clawed back some of its losses.

The blue-chip index is now trading down 0.7pc, outperforming rivals across Europe.

Heavyweight banking and consumer stocks, including HSBC, Barclays, Diageo and Unilever are leading declines amid wider turmoil across markets.

But the losses are being capped by gains for oil and commodity shares including BP, Shell, Anglo American and Rio Tinto.

Sentiment has also been helped by plans for a fresh round of talks between Ukraine and Russia later this afternoon, though Vladimir Putin's rhetoric suggests a diplomatic solution is unlikely. 

The FTSE 250 is faring worse, though, trading down 2.6pc.

Ukraine will hold the next auction of war bonds tomorrow as it looks to raise money to fund its defence against Russia's invasion.

The government has said it hopes to raise about $1.4bn (£1.1bn) through new one-year bond issues. It raised 8.1bn hryvnias (£200m) in its first auction last week.

In the time of military aggression of the Russian Federation, the Ministry of Finance offers citizens, businesses and foreign investors to support the budget of Ukraine by investing in military government bonds. https://t.co/toGOWfhysb pic.twitter.com/Fcee76hM60

— MinFin UA (@ua_minfin) March 7, 2022

Ukraine has said the third round of negotiations with Russia will kick off today at 4pm Kyiv time (2pm GMT).

Mykhailo Podolyak, one of President Volodymyr Zelensky's top advisors, said it would be the same delegation that took part in the previous talks.

Negotiations with the Russian Federation. Third round. Beginning at 16.00 Kyiv time. Delegation unchanged... pic.twitter.com/ycfT9LT0tc

— Михайло Подоляк (@Podolyak_M) March 7, 2022

Russia has said that all corporate deals with companies and individuals from what it describes as "unfriendly countries" will now have to be approved by a government commission.

The Kremlin said it had approved a list of countries and territories taking "unfriendly actions" against Russia, its companies and citizens in the wake of severe economic sanctions over the Ukraine conflict.

The list follows a presidential decree last week allowing the Russian government, companies and citizens to temporarily pay foreign currency debts owed to overseas creditors from "unfriendly countries" in roubles.

A government statement showed the list of countries included Britain, the US, EU member states, Japan, Canada, Norway, Singapore, South Korea, Switzerland and Ukraine.

The move comes as scores of businesses opt voluntarily to halt business in Russia due to its assault on Ukraine.

US officials are in talks with Venezuela and are considering a trip to Saudi Arabia in a bid to secure alternative sources of oil ahead of a potential ban on Russian imports.

A delegation led by Juan Gonzalez, the top Latin America adviser to the White House, and ambassador James Story travelled to Caracas over the weekend for meetings with socialist President Nicolas Maduro.

The two sides discussed the possibility of easing oil sanctions against Venezuela in the first high-level talks in years.

It marks an abrupt change in policy by the White House, which cut ties with Caracas in 2019 after accusing Mr Maduro of rigging the presidential election and recognising opposition leader Juan Guiado as Venezuela’s legitimate ruler.

The meetings have been viewed as a chance for US officials to gauge whether Venezuela is willing to distance itself from Russian President Vladimir Putin over his invasion of Ukraine.

An easing of sanctions against Caracas would also open the door to more supplies of oil, helping the US to find alternatives as relations with Moscow deteriorate further.

Read the full story here

Top law firm Freshfields has cut ties with VTB – just days after it represented the sanctioned Russian lender in a London courtroom.

The magic circle firm said: "We took immediate steps to terminate, suspend or decline mandates, and we are clear that we will not act for companies or individuals with close ties to the Russian state.

"In line with this clear position, we are also immediately taking steps to terminate our litigation mandate with VTB."

It comes a week after the firm took advantage of a last-minute licence from the UK government allowing it to represent VTB in litigation linked to the so-called tuna bond scandal in Mozambique.

At the time, Freshfields' lawyers said continuing to work for the bank was a "matter of professional obligation". But its decision to cut ties falls in line with rivals including Linklaters, Clifford Chance and Norton Rose Fulbright.

The company behind Uniqlo has said it will keep its stores in Russia open, joining a small group of companies defying a wider exodus from the country over its invasion of Ukraine.

Tadashi Yanai, chief executive of Fast Retailing, said: "Clothing is a necessity of life. The people of Russia have the same right to live as we do."

Uniqlo is very much in the minority of firms staying in Russia, joining the likes of McDonalds and Pepsi.

Retailers including Nike and Ikea have cut ties with Moscow, while the latest exits including Netflix, TikTok, accounting firms PwC, KPMG and EY and American Express.

The London Stock Exchange has cancelled a string of trades in Polymetal International after shares in the miner briefly surged more than 700pc.

The exchange operator said it was scrapping all traders executed between 8.41am and 9.02am. Earlier it had said it was reviewing the deals.

Russian miner Polymetal, which is set to be kicked out of the FTSE 100 after the Ukraine crisis sparked a collapse in its shares, briefly hit 1,400p in early trading – a surge of more than 700pc.

Ukrainian President Volodymyr Zelensky has called on the West to ramp up sanctions against Russia, proposing a boycott of Russian oil and other goods and a halt of exports to Russia.

An unprecedented wave of sanctions has already cut the Kremlin off from the global economy, but Mr Zelensky said pressure had to be increased and called for an effective international trade embargo.

He said:

If the invasion continues and Russia has not abandoned its plans against Ukraine, then a new sanctions package is needed... for the sake of peace.

Boycott imports to Russia – if they do not adhere to civilised rules, then they should not receive goods and services from civilisation – let the war feed them.

More Russian oil is being sold at heavily-discounted prices as traders shun the country's energy.

A cargo of Russian Sokol oil from the Far East was offered at a discount as wide as $14 a barrel to the benchmark Dubai price, Bloomberg reports.

That’s drastically lower than last week when Trafigura Group offered Sokol at a premium of $1 a barrel. 

Many traders were already avoiding Russian oil amid fears about sanctions and the reputational risk attached in the aftermath of the invasion of Ukraine.

But the US announcement that it's considering an embargo on Russian oil imports has left buyers even more unwilling to handle the country's barrels.

Wheat prices soared closest to their highest ever level as Russia's invasion of Ukraine threatens to cut off a major global supplier.

Prices jumped by the daily limit for the sixth straight session in Chicago, rising 7pc to $12.94 a bushel. That builds on a massive surge of 41pc last week and puts prices at their highest since 2008.

Wheat is a major food staple and the surging prices will pile pressure on government budgets while driving up costs on supermarket shelves.

The war threatens to cut off supplies from Ukraine and Russia, which together account for more than a quarter of global trade of wheat.

The London Stock Exchange is investigating trades in Polymetal International after shares in the Anglo-Russian miner briefly surged 700pc.

The FTSE operator said it was reviewing trades that were executed between 8.40am and 9am, saying it could cancel some of them. The LSE said a further updated notice would be issued in due course.

Polymetal shares traded as high as 1,400p earlier this morning – more than 700pc above the opening price. They've now pared gains to around 20pc.

The company has been on a wild ride amid escalating tensions in Ukraine. Alongside Roman Abramovich's Evraz, it's been booted out of the FTSE 100 after the war sparked a collapse in its share price, though the recent surge in commodity prices has helped fuel some gains in recent days.

It's getting hard to keep up with the wave of companies pulling out of Russia, so here's an update on the latest.

Netflix has said its shutting operations in Russia and said no new customers will be able to sign up, though it's unclear what will happen to existing accounts.

TikTok said it was suspending live-streaming and new uploads to its platform, citing concerns about new laws that threaten 15 years in jail for anyone who spreads 'fake' information about Russia's armed forces.

American Express said it's suspending operations in Russia, meaning its cards will no longer work at shops or ATMs. It follows similar moves by Visa and Mastercard.

Read more on this story: Russian banks turn to Chinese payments system after Visa and Mastercard suspend operations

Right on cue, the latest fuel price figures show pump costs for motorists just keep rising.

The average price of petrol has now risen above 155p a litre, setting yet another record and pushing the cost to more than £7 a gallon.

On Sunday, petrol reached 155.62p a litre while diesel now averages 161.28p a litre. according to the AA. A year ago they averaged 124.32p and 127.25p a litre respectively.

For a car with a typical 55-litre tank, filling up now costs nearly £17 extra than a year ago, going up from £68.60 to £85.59.

Luke Bosdet at the AA said:

A year ago, with pump prices rising steadily after the pandemic slump, 125p a litre was bad news but 155p was unimaginable.

Although with every pump price surge a slump eventually follows, notwithstanding the fuel trade’s reluctance to pass on savings quickly, £7 a gallon could well be a watershed moment.

For those car owners that can, it says it’s time to ditch petrol and diesel and switch to electric.

Although electricity is still susceptible to rising costs and market pressures, removing all those well-to-pump actors that can make a driver’s life a misery in a matter of weeks, will ensure a smoother ride with the cost of motoring – and a big saving initially.

ICYMI – Accountancy giants PwC and KPMG are cutting ties with Russia as the corporate backlash grows against Vladimir Putin’s invasion of Ukraine. 

Simon Foy has the details:

Member firms in Russia will leave the networks, both separately announced on Sunday night. 

Writing on LinkedIn, PwC’s global chairman Robert E. Moritz said: “We all continue to be shocked and horrified by the senseless war that the Russian government is inflicting on Ukraine and its people. 

“Our main focus has been helping our Ukrainian colleagues and supporting the humanitarian efforts to aid the people of Ukraine. 

“We have also been thinking about how we can take action in the way we run our network.

“We have decided that, under the circumstances, PwC should not have a member firm in Russia and consequently PwC Russia will leave the Network."

KPMG said its member firms in Belarus will also leave.

Read Simon's full story here

Jamie Maddock, energy analyst at Quilter Cheviot, says a ban on Russian oil imports would escalate the energy crisis further.

This option has so far been left off the table given the impact it would have on oil prices and therefore consumers, but talk of an import ban is getting more serious, causing a spike in prices.  

Russian crude oil exports amount to around 5m barrels a day, half of which goes to the European Union, so a ban from the EU would cut off an incredibly significant export market for Russia.

From the EU’s perspective, finding a replacement is going to be incredibly challenging in an already under supplied oil market. Most nations are now scrambling to secure oil supplies outside of Russia.

Politically, an import ban would likely spell the end of Iranian sanctions in order for the US to secure supplies. However, even in an optimistic return of crude oil to the market from Iran it wouldn’t make up for the lost oil from Russia.

 Sitting on the other side of the trade, the oil majors are well positioned to capitalise on further increases in oil and gas price, and could provide an effective inflation hedge while playing to the market’s value style preference.

Campaigners have written to every MP urging them to back a cut to fuel duty after Brent crude surged past $130 a barrel.

Petrol and diesel prices have smashed records in recent weeks as the unstoppable spiral in wholesale prices feeds through to motorists at the pumps.

FairFuelUK warned forecourt prices would rise even further this week, and called on Chancellor Rishi Sunak to slash fuel duty by 5pc.

The group also reiterated calls for an independent pump price monitoring body – similar to Ofgem or Ofwat – to ensure pricing was fair for motorists.

It's a sea of red on markets this morning, but there's still one winner: defence firms.

Vladimir Putin's insistence that the war will continue until Ukraine accepts his demand has dented hopes for a diplomatic solution and kept Europe on a war footing.

BAE Systems – Europe's largest defence firm, rose as much as 6.7pc to near the top of the FTSE 100. France's Thales gained 4.8pc, while Rheinmetall and Leonardo were up 2.6pc and 2.4pc respectively.

While the FTSE 100 is suffering heavy losses this morning, things are even worse on the continent.

Major European stock markets have plunged more than 20pc from their record highs, putting them on track for bear markets.

The Stoxx 50 index fell 3.9pc – its lowest since December 2020 and down 22pc from its November high. The benchmark Stoxx 600 was down 2.8pc.

Meanwhile German benchmark Dax fell 3.7pc and France's CAC 40 dropped 4pc, putting them both on course for bear markets.

A bear market is when an index drops more than 20pc from its record high. A fall of more than 10pc is known as correction territory. 

While benchmark European prices have surged, it's the same story for the UK equivalent.

Wholesale prices leapt 73pc to 800p a therm – a new record high. Trading seems volatile, though, with gas dropping back down to 650p.

Wholesale UK gas prices up 73% benchmark prices top 800p a therm pic.twitter.com/pBEufRkKK3

— Richard Fletcher (@fletcherr) March 7, 2022

Sterling has slumped to its lowest against the dollar since December 2020 as investors flock the dollar amid an escalation in the Ukraine war.

The pound tumbled as low as $1.3156 – a level not seen since before the UK finalised its exit from the EU.

The decline comes alongside losses for the euro, which last week slide below $1.10 for the first time since May 2020.

An escalation in conflict and a potential embargo on Russian oil have sent fresh shockwaves through markets, pushing investors to safe-haven assets. Gold as surged above $2,000 an ounce, nearing highs seen at the start of the pandemic.

The FTSE 100 has crashed to its lowest level in a year as soaring oil prices on talks of an embargo against Russia fuelled inflation fears across the globe.

The blue-chip index tumbled 2.6pc to its lowest since March 2021, with financial stocks and consumer staples leading the losses.

Lloyds, HSBC and Barclays were among the heavyweight stocks racking up losses, alongside Diageo, British American Tobacco and AstraZeneca.

British Airways owner IAG posted the most dramatic slide, falling 10pc.

Miners and energy stocks helped to limit losses, with Evraz and Polymetal International jumped 50pc and 18pc respectively.

The domestically-focused FTSE 250 plunged 4.2pc.

The blistering rise in energy prices is continuing.

After topping €200 a megawatt hour for the first time on Friday, European gas prices have now surged above €300.

The benchmark price jumped as much as 62pc to €311, extending an unprecedented rally after prices doubled last week.

The threat of a US ban on Russian oil imports is fuelling fears that Vladimir Putin could retaliate by cutting off gas supplies to Europe.

The rouble has crashed to a fresh record low in offshore trading amid concerns an embargo on Russian oil will crush the country's economy.

The Russian currency dropped 10pc to 136.50 against the dollar after the US said it was in talks over a ban on imports.

The jitters spread across a range of European currencies, with the euro dropping to a new 22-month low against the dollar.

The Hungarian forint and the Polish zloty also declined as oil prices surged as high as $139 a barrel.

Gold has surged close to record highs while prices for a range of commodities are back on the rise as Russia's assault on Ukraine intensifies.

The precious metal jumped above $2,000 an ounce for the first time in more than 18 months, closing in on highs reached in the early stages of the pandemic.

Meanwhile, copper and palladium hit all-time highs. Nickel jumped as much as 20pc, while wheat hit is daily limit for the sixth day in a row.

It comes after commodities racked up a record-breaking week of gains, fuelled by fears of disruption from the region.

The sell-off is spreading across global markets, with European stocks poised to collapse into a bear market.

The Stoxx 50 index dropped 1.9pc at the opening bell amid fears the war could fuel inflation even further. It's plunged 20pc from its record high in November, putting it on track for a technical bear market if the losses hold at the close.

This is also the case for the German benchmark Dax and France's CAC 40, which are down 22pc and 20pc respectively from their recent records.

The benchmark Stoxx 600 index is also down 16pc from its own January record high, meaning it's in correction territory.

The FTSE 100 has started the week firmly in the red as investors grew increasingly worried about the impact of the Ukraine war on the global economy.

The blue-chip index dropped 0.8pc at the open to 6,929 points after oil surged as high as $139.

Former Tory energy minister Lord Barker has resigned as chairman of Russian aluminium giant EN+ amid a mounting backlash over his position.

EN+, which is part owned by oligarch Oleg Deripaska, said Lord Barker's departure would take effect following a "short period" as he helps to hand over to a new chairman.

The Tory peer had refused to give up his role in the company, saying he had a “real responsibility” for thousands of workers on the ground in Ukraine and would not “walk away when there is fighting just miles from our plant here”.

Separately, EN+, which was suspended from the London Stock Exchange last week, confirmed it was exploring a carve-out of its listed subsidiary Rusal.

Read more on this story: Former energy minister clings on at company backed by sanctioned Russian oligarch

The UK will consider banning oil imports from Russia after the US said it was in discussions to do so.

James Cleverly, Europe minister, told Times Radio: "We import very, very little Russian hydrocarbons anyway. So that's something that we will of course, consider."

While the focus is on oil, panic is spreading through energy markets.

Benchmark European gas prices, which doubled last week to hit a new record of €200 a megawatt-hour, surged even further this morning to an unprecedented €225.

The US is weighing up a ban on Russian oil, sparking fears that Vladimir Putin could retaliate by cutting gas supplies to Europe.

This would plunge the continent even deeper into crisis. Europe relies on Russia for about a third of its gas, so any disruption to supply could lead to extreme measures such as rationing.

The latest surge in oil prices is fuelling bets that prices could rise even further, with some traders expecting $200 before the end of March.

Brent has hit its highest since 2008 as the market weighs the possibility of a ban on Russian imports.

At least 200 contracts for the option to buy May Brent futures at $200 a barrel traded this morning, according to Bloomberg data. The prices to buy them jumped more than 150pc.

Contracts for other (less radical) bets also surged in price amid panic of talks of a Russian crude ban.

JP Morgan has predicted that Brent could end the year at $185 a barrel if there's continued disruption to Russian supplies.

Good morning.

Another week, another jaw-dropping rally in energy prices.

Brent crude surged as high as $139 after the US said it was in discussions over an embargo of imports from Russia, with reports it could roll out the measure even without the support of its European allies.

The West has so far refrained from targeting Russia's energy sector with sanctions, given the impact it would have on prices. Still, many traders have decided to shun Russian oil anyway.

But an official ban would spark an even bigger supply crisis at a time when the market is already under pressure. It would also fuel fears that Vladimir Putin could retaliate by cutting gas supplies to Europe.

1) War in Ukraine risks triggering civil unrest in Middle East, analysts warn Disruption to what supplies is pushing up prices, with Egypt and Lebanon particularly vulnerable

2) Sanctioned Russian defence companies attend major arms fair in Riyadh The World Defense Show has started in Riyadh

3) PwC and KPMG withdraw from Russia Auditors join going corporate backlash against invasion of Ukraine

4) UK investors have £5bn trapped in Moscow’s shuttered stock market Russia’s stock market was closed for all of last week

5) Russia’s credit rating slashed to second worst level of junk Ratings agency Moody’s considers the country more likely to default on its debts than Iraq, Ecuador or Ethiopia

Oil leapt as it emerged both Europe and the US are discussing a possible embargo on Russian oil imports.  There are also concerns over delays in the potential return of Iranian crude to global markets, with talks to revive Iran's 2015 nuclear deal with world powers mired in uncertainty. In the first few minutes of trade on Sunday, both Brent and WTI benchmarks rose to their highest since July 2008 with Brent at $139.13 a barrel and WTI at $130.50.

• Corporate: Clarkson, HgCapital Trust (full-year results)
• Economics: Halifax house price index (UK); trade balance (China); retail sales (Germany)