Europe midday: Shares lower despite hopes on Ukraine peace talks

European stocks were still sharply lower on Monday as the West ratcheted up financial pressure on Russia in response to its invasion of Ukraine and despite tentative peace talks starting between the waring nations.

The pan-European Stoxx 600 index was down 1.4% with Germany’s DAX down 2.43% and France’s CAC 40 more than 3.4%. Investors were also spooked by President Vladimir Putin putting Russia's nuclear deterrent on high alert.

Talks between Ukraine and Russia got under way on the border with Belarus on Monday morning. Ukraine had agreed to talks with Russia “without preconditions”, the office of President Volodymyr Zelenskyy said on Sunday.

Fears of supply shortages saw crude oil jump almost 5% while the Russian rouble plunged by almost 30% to a record low as Russian banks were blocked from the SWIFT global payments system.

Long lines of Russians were seen queuing at bank cash machines to withdraw their money, sparking fears of a run on local financial institutions.

The sanctions hit regional banks with exposure to Russia, including Austria's Raiffeisen Bank, UniCredit and Societe Generale.

Mondi shares fell 9% as it suspended production at its paper bag plant in Lviv, employing approximately 100 people.

Shares in energy giant BP were on the slide after the company said it was abandoning its stake in Russian state oil company Rosneft at a cost of up to $25bn.

France's Renault, which controls Russian carmaker Avtovaz, fell 6.9%. Finland's Nokian fell more than 22% as it was forced to move production from Russia.

Anglo-Russian miner Polymetal plunged 50% over the Ukraine crisis, despite the company last week saying it did not expect to be hit by sanctions.

Defence company Rheinmetall surged by 37% after German Chancellor Olaf Scholz on Sunday said the country would sharply increase defence spending to more than 2% of its economic output.