Ukraine fears rock global markets

■ £43.5billion wiped off value of UK shares ■ Oil price surges towards $100 a barrel

Tens of billions of pounds were wiped off the value of British shares yesterday as worries about war in Ukraine sent global stock markets into a tailspin.

On a bleak day for investors, the FTse 100 index tumbled 1.7pc, or 129.43 points, to 7531.59 while the FTse 250 was down almost 2pc.

The rout cut the value of Londonlisted companies by £43.5bn with Russian steel giant evraz the biggest loser – plunging 29pc.

Across europe indices in Frankfurt and Milan were down 2pc, Paris 2.3pc and Madrid 2.6pc. At the same time, oil rose above $96 a barrel for the first time since October 2014.

Marc Kimsey, an equity trader at Frederick & Oliver, said: ‘All bets are off, bar oil. Traders are speculating on oil hitting $100, with a week of rising Russia-Ukraine tensions ahead.’

The Us dollar made gains against major currencies, including the pound and the euro as investors sought out the relative safety of the greenback.

Francesco Pesole, a foreign exchange

‘A looming conflict and soaring prices’

strategist at banking group InG, said: ‘Headlines about Russia-Ukraine geopolitical tensions have taken centre stage again. This week is set to be a pivotal one to gauge how the geopolitical situation develops.’

Investors were also spooked by mounting speculation of interest rate rises in the UK and the Us next month as central banks step up the fight against inflation.

Official figures last week showed that Us inflation was at 7.5pc, the highest for 40 years.

susannah streeter, senior investment and markets analyst at Hargreaves Lansdown, said the ‘twin troubles of a looming conflict and soaring prices’ have dented investor confidence.

‘Just as the storm of Covid appeared to be receding, the growing expectation of an invasion of Ukraine is the fresh threat now unnerving investors, with confidence plunging in many parts of the world,’ she said.

‘With worries that inflation is already running far too hot, the possibility Russian troops could move across the border has led to another surge in the oil price.

‘energy markets are clearly on edge and if supplies are threatened there is a risk oil will shoot up even higher, adding to price pressures for companies.’

Airlines and travel companies were among the stocks in retreat amid fears that war in europe would hit demand.

Wizz Air was down 6.3pc and British Airways owner IAG was 5.6pc lower. Cruise company Carnival fell 4.8pc.

A report by Capital economics warned war in Ukraine could push oil to $120 a barrel and add 2 percentage points to inflation in developed markets.

That would tighten the squeeze on living standards in the UK where inflation is forecast to hit 7pc this spring.

And it could force the Bank of england to raise interest rates even further in an effort to keep a lid on prices. simon MacAdam, senior global economist at Capital economics, said: ‘A Russian invasion of Ukraine or severe ratcheting up of sanctions would add as much as two percentage points to inflation in developed markets, particularly in europe.

‘Given the inflationary backdrop and hawkish signals from central banks, monetary policy could be tightened more aggressively as a result.’

Mark Haefele, chief investment officer at UBs, said: ‘We still think diplomatic efforts will eventually lead to a dialling down of tensions.

‘This may take several months, during which the possibility of flare-ups like the one we are experiencing today remains elevated.’