Stocks retreat as Russia downplays hopes of Biden-Putin summit

LONDON — Stock markets mostly fell on Monday as the Kremlin warned there were no firm plans for a summit between US President Joe Biden and Russian counterpart Vladimir Putin to avert a possible Moscow invasion of Ukraine.

Warnings from US officials that Russia could invade its neighbour imminently sent markets spiralling last week and briefly sent crude surging towards $100 per barrel as traders fret over already tight supplies.

The Ukraine crisis has compounded worries about decades-high inflation that is causing central banks to hike interest rates.

Asian and European equity markets mostly retreated on Monday, though London managed to edge higher on hopes for the UK economy as Prime Minister Boris Johnson was set to announce an end to all pandemic legal curbs in England.

French flag-carrier Air France said it was cancelling its flights to and from Kyiv scheduled on Tuesday over security concerns sparked by the Russian troop build-up on Ukraine's border.

Air France, which runs return Paris to Kyiv flights also on Sundays said the move was a "precautionary measure".

The United States is "committed to pursuing diplomacy until the moment an invasion begins", Biden's press secretary Jen Psaki said. 

With Russia a key exporter of crude, all eyes are on oil prices, which steadied on Monday.

"A proposed summit does offer some relief to the market, as it suggests that both sides are still possibly open to dialogue," said Warren Patterson at ING Groep NV.

"Asset prices, particularly commodities, will continue to be heavily influenced by Russia-Ukraine noise."

Observers are warning that oil at $100 per barrel could soon be breached and could hold above that level for an extended period, even if talks on Iran's nuclear programme succeed and lead to the resumption of Tehran's crude exports.

The sharp rise in crude is a key driver of inflation across the planet, adding to supply chain snarls and bottlenecks.

While expectations are for a Fed rate hike next month, some bank officials at the weekend indicated they were not in favour of a 50 basis point rise, as has been suggested in light of soaring consumer prices.

The prospect of higher borrowing costs this year has weighed on markets for months, bringing a near two-year equity rally to an end with commentators predicting further volatility.