Gas deliveries were due to resume on Saturday, but Russia canceled that deadline on Friday and did not give a new deadline for reopening. The news fueled fears of a recession in Europe, with businesses and households hit by sky-high energy prices.
Gas prices in Europe jumped 30% when the market opened.
Germany on Sunday announced around $65 billion in support to help shield Germans from rising costs.
Finland and Sweden have announced their intention to offer liquidity guarantees to electricity companies. Finland’s economic affairs minister has warned of the possibility of a “sort of Lehman Brothers of the energy industry”, referring to the 2008 collapse of what was then the fourth-largest US investment bank .
At 11:23 GMT, the MSCI World Stock Index, which tracks stocks from 47 countries, was down 0.4% on the day. The European STOXX 600 fell 1.2%, not far from a seven-week low.
London’s FTSE 100 was down 0.6% and Germany’s DAX was down 2.6%.
A holiday in US markets means lower liquidity, which could lead to outsized market movements.
The euro was trading around $0.99175, down 0.4% on the day. It slid during Asian trading hours and hit $0.9876 in early European hours, its lowest since 2002.
Eurozone government bond yields rose, with Italian 10-year yields heading towards 4%.
The European Central Bank (ECB) is meeting later this week and is expected to make its second big rate hike in a bid to tackle inflation, which is more than four times its 2% target.
“Skylifting energy prices, the risk of gas shortages, and the fiscal and regulatory response will shape the outlook for eurozone GDP and inflation far more than anything the ECB could do with rates,” Berenberg chief economist Holger Schmieding said in a client note.
In the UK, Liz Truss has been named Britain’s next prime minister, taking power at a time when the country is facing a cost of living crisis, industrial unrest and a recession. In her victory speech, Truss said she plans to cut taxes and pay energy bills.
The pound was down about 0.2% at $1.1495, but stable against the euro at 86.27 pence.
The US dollar index was flat and the risk-sensitive Australian dollar was near a seven-week low.
Oil prices rose more than $2 a barrel as investors awaited an OPEC+ meeting later in the day. Since multi-year highs in March, oil prices have fallen on fears that rising interest rates and COVID-19 curbs in parts of China, the world’s top crude importer, could slow growth. global economy.
The rebound in China’s service sector growth eased slightly in August, data showed on Monday, but business confidence hit a nine-month high.
Data from the Eurozone PMI survey showed the German services sector contracted for a second straight month in August, the Spanish services sector expanded at its slowest pace since January and that the French services sector recorded modest growth, although purchasing managers there said the outlook was bleak.
“PMI surveys signal that the eurozone is entering recession sooner than we previously thought, led by its largest economy, Germany,” Peter Schaffrik, strategist at RBC Capital Markets, said in a client note.
“We now see the Eurozone ‘benefiting’ from a three-quarter longer recession, starting in Q3 2022 and continuing through Q1 2022, which is also deeper than we previously anticipated. “
(Reporting by Elizabeth HowcroftEditing by Mark Potter and Andrew Heavens)
By Elizabeth Howcroft