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European markets fall sharply as new sanctions are imposed on Russia; Stoxx 600 down 1.9%

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LONDON — European stocks were sharply lower on Monday as global markets track developments in the Russia-Ukraine crisis.

The pan-European Stoxx 600 dropped 1.7% in early trade, with banks plunging 5.7% to lead losses on the back of fresh sanctions as almost all sectors and major bourses slid into negative territory. Utilities bucked the trend to add 1%.

The Russian advance into Ukraine has continued throughout the weekend. Russian military vehicles entered Ukraine’s second-largest city Kharkiv, with reports of fighting taking place and residents being warned to stay in shelters.

More sanctions have been imposed on Russia for its invasion of Ukraine, with the United States, Europe and Canada agreeing Saturday to remove key Russian banks from the interbank messaging system, SWIFT. The U.K. and EU have also closed their airspace to Russian aircraft.

Russian President Vladimir Putin put his country’s nuclear deterrence forces on high alert on Sunday amid a growing global backlash against the invasion. Ukraine’s Defense Ministry said representatives for Ukraine and Russia have agreed to meet on the Ukraine-Belarus border “with no preconditions.”

U.S. stock futures moved lower in overnight trading on Sunday as investors grew concerned about the economic ramifications of the Russia-Ukraine crisis. Shares in Asia-Pacific were mostly higher on Monday.

Oil futures were up more than 4% and the Russian ruble dived around 29% against the dollar on Monday morning, as markets assessed the impact of sanctions on Russia.

Earnings came from Atos, Signify and GSK on Monday.

Defense pops, Russian-exposed stocks sink

Individual share price movement on Monday was heavily dictated by the conflict.

Defense companies rallied hard in early trade, with Rheinmetall soaring 28% to lead gains, after the German government’s decision to increase defense spending. Shares of BAE Systems, Leonardo and Thales all saw double-digit bounces.

At the bottom of the European blue chip index, Polymetal International plunged more than 48% as the Anglo-Russian miner continued to nosedive as a result of its Russian exposure. Finland’s Nokian Tyres tumbled 21%.

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— CNBC.com staff contributed to this market report.

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