European shares plunge as investors assess Russia-Ukraine crisis

STOXX eyes lowest level in four months, tech stocks drop 2.5%; Valneva up on vaccine manufacturing grant in Scotland

European shares performed a U-turn on Monday, with auto and technology stocks leading the losses after comments from the Kremlin quelled hopes of a resolution to Europe's biggest military crisis in decades.

The pan-European STOXX 600 slid 1.4% to its lowest level since October after gaining in early trade.

Technology stocks shed 2.5% to mark their fourth straight day of losses. The sector, along with the European benchmark, has spent seven of eight weeks in negative territory so far this year.

The Kremlin on Monday said there were no concrete plans for a summit over Ukraine between Russian President Vladimir Putin and his U.S. counterpart Joe Biden, after the French president said the two leaders had agreed on a meeting in principle.

"Simmering tensions over Ukraine kept investors on edge at the start of the new trading week even as hopes of a peaceful resolution for the crisis were kept alive by a last-ditch effort by France," said Raffi Boyadjian, lead investment analyst at brokerage XM.

The U.S. and Britain have repeatedly cautioned that Russia is about to invade Ukraine, a step Washington and London say would trigger the biggest conflict since the end of World War Two.

"The latest developments suggest the markets’ rollercoaster ride is far from being over just yet as the Ukraine crisis has erupted at a time when traders are also grappling with tightening monetary policy around the world amid soaring inflation," Boyadjian added.

The STOXX 600 started the week on a glum note, extending its losses from last week on concerns about Ukraine and fears of aggressive policy tightening from the U.S. Federal Reserve and other central banks to combat inflationary risks.

Meanwhile, the euro zone economic recovery rebounded sharply this month as an easing of coronavirus restrictions gave a boost to the bloc's dominant service industry, a survey showed, but consumers faced prices rising at a record rate.

Worldline skidded 2.1% after the payments company said it has entered exclusive talks to sell its TSS terminals business to U.S. financial company Apollo Funds in a deal potentially worth around 2.3 billion euros ($2.61 billion).

French vaccine maker Valneva climbed 0.8% after saying its Scottish unit has received a grant of up to 20 million pounds ($27 million) to partly fund the research and development of manufacturing its COVID-19 vaccine VLA2001.

U.S. markets are closed on Monday for the Presidents Day holiday.

($1 = 0.8804 euros)