Gas deliveries had been due to resume on Saturday but Russia scrapped this deadline and did not give a new timeframe for re-opening. The news reinforced expectations for a recession in Europe, as businesses and households are hurt by sky-high energy prices.
European gas prices jumped as much as 30% on Monday.
Germany announced on Sunday around USD 65 billion of support to help protect Germans from soaring inflation.
Finland and Sweden announced plans to offer liquidity guarantees to power companies in their countries.
At 0743 GMT, the MSCI world equity index , which tracks shares in 47 countries, was down 0.5% on the day. Europe’s STOXX 600 was down 1.5%, not far from a seven-week low.
London’s FTSE 100 was 0.8% lower and Germany’s DAX was down 2.9%.
A public holiday in US markets means lower liquidity, which could lead to outsized market moves.
The euro was trading around USD 0.99185, down 0.4% on the day. It slid during Asian trading hours and hit USD 0.9876 in early European hours, its lowest since 2002.
Euro zone government bond yields rose, with Italian yields heading towards 4%.
The European Central Bank (ECB) meets later this week and is expected to deliver its second big rate hike in an attempt to combat inflation.
“Sky-high energy prices, the risk of gas shortages and the fiscal and regulatory response will shape the outlook for Eurozone GDP and inflation much more than anything the ECB may do with rates,” said Berenberg chief economist Holger Schmieding in a client note.
Meanwhile in the UK, Liz Truss is expected to be named as Britain’s next prime minister later on Monday. She is poised to take power at a time when the country faces a cost of living crisis, industrial unrest and a recession.
The British pound was down around 0.4% at USD 1.1476, but flat against the euro at 86.405 pence.
The US dollar index was steady and the risk-sensitive Australian dollar was near a seven-week low.
Oil prices rose more than USD 2 a barrel as investors waited for an OPEC+ meeting later in the day. Since March’s multi-year highs, oil prices have fallen due to concerns that interest rate rises and COVID-19 curbs in parts of China, the world’s top crude importer, may slow global economic growth.
China’s service sector growth rebound eased slightly in August, data on Monday showed, but business confidence rose to a nine-month high.
Other PMI survey data on Monday showed that Germany’s services sector contracted for a second month running in August, while Spain’s services sector expanded at its slowest rate since January.
(Reporting by Elizabeth Howcroft; Editing by Mark Potter)
This article originally appeared on reuters.com