European stock markets have hit a one-year low, with German and French shares entering a bear market, as western nations debate a ban on importing Russian oil.
The pan-European STOXX 600 index fell 3.0% to 409.29 on Monday (March 7).
The German DAX and France’s CAC 40 have now declined more than 20% (the technical indicator for a bear market) from their record highs on January 5 of this year and are on course to confirm bear market levels. The indexes were down 3.9% and 3.7% respectively Monday.
Strong gains in London’s mining and energy giants partially offset losses in the FTSE 100, which dropped 1.9%, while Italy’s FTSE MIB fell 3.7% and Spain’s IBEX dropped 3.8%.
Brent crude oil, the international benchmark, soared to nearly $140 U.S. a barrel, its highest level since 2008 after U.S. Secretary of State Antony Blinken said the United States and its European allies are discussing banning imports of Russian oil in retaliation for its invasion of Ukraine.
Russia supplies account for 17% of global natural gas consumption, and 40% of Western European consumption, according to Goldman Sachs (GS).
A measure of volatility across euro zone stocks breached 50 points for the first time since the pandemic-fuelled sell-off in March 2020. It was last up seven points at 56.65 points.
European oil and gas sector jumped 2.2%, while miners gained 1.4%, making them the only sectors trading in the black.
Leading the losses in European stocks were shares of retailers, automakers and banks, which each fell more than 5% on Monday.
The euro-zone bank index declined 6.7% to a 13-month low ahead of a European Central Bank meeting later this week, with mixed views about how the central bank will respond to the potential economic impact of the Ukraine conflict.