Stocks sink as atomic plant shelling adds to Ukraine fears

European and Asian stock markets tumbled Friday as Russia's shelling of a nuclear power plant in Ukraine, Europe's biggest, heightened tensions over the crisis.

Europe's main stock markets plunged more than three percent in midday deals after Asian indices closed sharply lower.

The euro sank close to a two-year low under $1.10 on Friday as the Ukraine conflict clouds the eurozone's economic recovery from the coronavirus pandemic.

The European single currency slid in late morning deals to $1.0974, the lowest level since May 2020, as the greenback benefited also from its status as a haven investment.

"Investors have been rattled by the turn of the fighting in Ukraine, after a nuclear plant was attacked which has heightened worries about the potential escalation of the crisis," noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Oil prices climbed once more on fears of supply disruptions to Russian crude but were far off heights of almost $120 per barrel reached Thursday.

Hopes for an Iran nuclear deal that would allow Tehran to restart crude exports to the world market capped crude's gains, analysts said.

Ukraine's President Volodymyr Zelensky has meanwhile demanded still tougher sanctions against his Moscow foes after Russian forces attacked and seized the Zaporizhzhia nuclear power plant, but Kyiv said no radiation leak was detected.

Western countries have hit Russia's economy hard including by closing airspace, freezing assets and excluding seven banks from the SWIFT interbank messaging network.

The impact is already impeding Moscow's ability to shore up the beleaguered ruble and purchase imports.

Russia's invasion of its neighbour Ukraine has sent global stock markets slumping over the week, during which time commodities including wheat, metals and particularly oil have soared.

That has fuelled concerns that the global economic recovery from Covid-19 will be derailed, especially with surging prices adding to worries about decades-high inflation.

To combat rocketing costs, Federal Reserve boss Jerome Powell this week said he intends to raise US interest rates this month, though he tempered expectations of a half-point rise.

"The economic clinch point of this war is commodity prices," said City Index analyst Fiona Cincotta.

"Higher energy prices, slowing growth, and surging inflation are not a good outlook."