European stock markets tumbled into the red on Tuesday as geopolitical tensions between Russia, Ukraine and the west continued to weigh on investors.
In London, the FTSE 100 (^FTSE) was 1.3% lower by noon trade, while the CAC (^FCHI) lost 3.3% in Paris, and the Frankfurt DAX (^GDAXI) was 2.9% lower.
It came as French finance minister Bruno Le Maire issued a stark warning to Moscow.
“We will bring about the collapse of the Russian economy,” he told a French broadcaster. “The economic and financial balance of power is totally in favour of the European Union which is in the process of discovering its own economic power.
“We are waging total economic and financial war on Russia.”
In response, Dmitry Medvedev, a former Russian president, wrote on Twitter: “Today, some French minister has said that they declared an economic war on Russia.
“Watch your tongue, gentlemen! And don’t forget that in human history, economic wars quite often turned into real ones.”
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “This is a fast-moving situation and investors should be mindful of potential share price volatility in the short to medium term.”
Meanwhile, Mastercard (MA) and Visa (V) have blocked multiple financial institutions from their payment networks after the west rolled out tough new sanctions against Russia.
Recent sanctions have caused a spike in cryptocurrencies, particularly in Russia and Ukraine. Bitcoin (BTC-USD) trading in the Russian rouble went into overdrive when the invasion began last Thursday with daily volumes rising around 260% from a day earlier to 1.3bn rouble (£9.2m, $13.5m), according to data from CryptoCompare.
“The direct implication of Russian sanctions was a surge in cryptocurrency prices, and especially bitcoin,” Ipek Ozkardeskaya, senior analyst at Swissquote, said.
Read more: Bitcoin: Binance and Kraken refuse to ban Russian users
“The coin, which was moving along with the risk assets less than a couple of days ago, is now the asset that Russians and Ukrainians rely on to get their funds out of the traditional system which has become very hostile to them.
“Being able to transact value in bitcoin also helps Russian oligarchs go around the Western sanctions. It may also help Russian companies and even the Russian central bank to move funds as these entities can no longer access US dollars, and most of the Russian banks are no longer part of the SWIFT system.”
Ukraine has also been asking for donations in cryptocurrency to help fund its defence.
Watch: Economic sanctions slam Russia’s economy
The Russian rouble regained some footing after it plunged 30% to a record low of 120 per dollar on Monday, while the safe-haven dollar resumed its rise against other major currencies.
The Russian central bank more than doubled its key interest rate to 20%, and also announced a slew of other measures to stem the decline.
Russian stock and derivative markets will remain closed for a second day.
Read more: How economic sanctions work
Across the pond, S&P 500 futures (ES=F) were up 0.5%, Dow futures (YM=F) also climbed 0.5%, and Nasdaq futures (NQ=F) gained 0.2% as trade began in Europe.
JPMorgan (JPM) said on Tuesday that selling stocks now carries too much risk, noting that fundamentals for equities remain supportive.
Stocks in Asia enjoyed another broadly positive day, with the Nikkei (^N225) climbing 1.2% in Tokyo while the Hang Seng (^HSI) rose 0.2% in Hong Kong, and the Shanghai Composite (000001.SS) was 0.8% higher.