Equity markets plunged while oil and haven assets rallied Tuesday after Russia's Vladimir Putin ordered troops into two separatist regions in eastern Ukraine, ramping up geopolitical tensions and fears of a conflict.
Investors were sent running after Putin recognised the independence of two rebel-held areas of Donetsk and Lugansk and sent in "peacekeeping" forces.
The move came hours after the Kremlin appeared to pour cold water on a potential summit with US President Joe Biden and led to condemnation from world leaders and warnings Moscow would be hit with a series of sanctions.
Biden, France's Emmanuel Macron and German Chancellor Olaf Scholz warned that Moscow's gambit "would not go unanswered".
The White House said Biden would issue an executive order to "prohibit new investment, trade, and financing by US persons to, from, or in" the two rebel regions.
A French presidential official said the European Union was preparing a list of Russian entities and individuals to sanction in a "proportionate" response to the recognition.
The European Union said it would adopt sanctions later Tuesday.
The prospect of war and strict sanctions sparked concerns about the impact on supplies of a range of commodities from the region, including oil, wheat and nickel.
Crude -- already up more than 25 percent this year on surging demand -- piled higher still on Tuesday, with Brent closing in on the $100 mark for the first time since 2014.
Hopes of an Iran nuclear deal, which could see Tehran resume global oil exports, were unable to temper the gains.
The jump in oil is compounding worries about inflation around the world, with the Federal Reserve coming under intense pressure to tighten monetary policy to prevent prices running out of control.
That has in turn battered equity markets in recent months, and the latest developments out of Europe led to another day of hefty selling Tuesday.
Russia's MOEX index plunged eight percent at the open, having lost 10 percent Monday, while London, Paris and Frankfurt tumbled in early exchanges.
In Asia, Tokyo, Shanghai, Sydney, Seoul, Singapore, Mumbai and Taipei dived at least one percent, while there were also losses in Bangkok, Jakarta and Wellington.
Hong Kong tanked 2.7 percent owing to a selloff in tech firms as traders again fret over the possibility China will embark on another crackdown on the sector.
Those fears were fuelled by a report that regulators had ordered a probe into state firms' links with Alibaba fintech arm Ant Group. The city's struggle to contain a Covid outbreak has also hit sentiment in Hong Kong as leaders impose strict containment measures.
"It's a fluid situation in the evolving geopolitical thematic we see before us," Chris Weston, of Pepperstone Financial Pty, said.
"Traders are currently playing defence as lower liquidity, driven by the US Presidents Day holiday, (exacerbates) moves."
The uncertainty on trading floors was also pushing safe havens higher, with gold climbing past $1,900 and heading for a one-year high, while the yen was also stronger against the dollar.
The greenback was sharply higher against other currencies, however, including a four percent gain on the ruble.
And commentators warn of further pain if Putin presses ahead with an invasion of Ukraine.
"Uncertainty still rules," Cristian Maggio, at TD Securities, said before Putin's recognition of the rebel regions. "In the case of armed conflict, Russian assets will weaken substantially more than now."
- Key figures around 0820 GMT -
Tokyo - Nikkei 225: DOWN 1.7 percent at 26,449.61 (close)
Hong Kong - Hang Seng Index: DOWN 2.7 percent at 23,520.00 (close)
Shanghai - Composite: DOWN 1.0 percent at 3,457.15 (close)
London - FTSE 100: DOWN 1.4 percent at 7,379.87
West Texas Intermediate: UP 3.7 percent at $94.46 per barrel
Brent North Sea crude: UP 2.2 percent at $97.53 per barrel
Euro/dollar: DOWN at $1.1301 from $1.1337 Monday
Pound/dollar: DOWN at $1.3573 from $1.3609
Euro/pound: DOWN at 83.22 pence from 83.33 pence
Dollar/yen: DOWN at 114.72 yen from 114.82 yen
New York - Dow: Closed for a public holiday
-- Bloomberg News contributed to this story --