The FTSE 100 index fell by more than 1.5 per cent on Tuesday and European shares hit a seven-month low as a long-feared Russian invasion of Ukraine now appeared to be underway, Daily Mail reported.
As Russian President Vladimir Putin ordered forces into separatist regions of eastern Ukraine, the benchmark index of Britain's leading companies dropped by 1.53 per cent or 115 points to 7,370 in early trading in London this morning.
Elsewhere in Europe, Germany's DAX fell 2.07 per cent or 311 points to 14,731 this morning, and the CAC 40 in Paris dropped 1.91 per cent or 129 points to 6,659.
Investors were reacting to the apparent end of slim remaining hopes of averting a major conflict in Europe that could cause massive casualties, energy shortages on the continent, and economic chaos around the globe, the report said.
Brent crude surged to its highest level since September 2014, reaching $99.50 a barrel at one stage due to fears over disruption to supplies, with Moscow's actions set to prompt new sanctions from governments worldwide on Russia, Daily Mail reported.
The DAX is seen as more vulnerable than other regional indices due to Germany's heavy reliance on Russian gas supplies and the lack of energy companies on the index.
Investors scurried to the relative safety of gold and government bonds as the US and its European allies were poised to announce harsh new sanctions against Russia, the report added.