By Tom Wilson

LONDON (Reuters) – Global equity markets skidded on Monday as the prospect of a Russian attack on Ukraine quashed demand for riskier assets such as bitcoin, and bolstered the dollar and oil.

NATO said on Monday it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets in response to Russia’s military build-up at Ukraine’s borders.

The move added to a flurry of signals that the West is bracing for an aggressive Russian move against Ukraine, though Moscow denied any plan to invade.

The U.S. State Department said on Sunday it was ordering diplomats’ family members to leave Ukraine, while U.S. President Joe Biden weighed options for boosting United States’ military assets in the region to counter a buildup of Russian troops.

The Euro fell 2.1% to its lowest since Dec. 20 and was on course for its worst day since late November. Indexes in London, Paris and Frankfurt all were down between 1% and 2%.

Among the casualties were tech stocks, which fell 4% to their lowest since July. The sector had already been on the back foot after Wall Street was pummelled last week by prospects of rising interest rates.

Travel and leisure shares were down 4.5%, set for their worst day since late November.

Wall Street looked set to open in the red. and Nasdaq futures both turned negative in London trading, and were last down about 0.4%.

Analysts noted a reluctance among investors to pile back into equities that has rarely been seen in the post-2008 era of ultra-low interest rates and central bank-boosted liquidity.

“Ukraine at the moment is really front of mind,” said Michael Hewson, chief market analyst at CMC Markets. “Over the last 12 years, buy-the-dip is the mentality for investors generally. This the first time in the last 12 years, I’ve felt, that’s not the default position to be in.”

The MSCI world equity index, which tracks shares in 50 countries, fell 0.5%. Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.2%.

As investors pulled money from stocks, oil prices rose again, having climbed for five weeks to a seven-year peak on expectations demand will stay strong and supplies limited. [O/R]

added $1 cents to $88.89 a barrel.

Other riskier assets suffered. tumbled almost 9% on Monday to its lowest in six months. The cryptocurrency has lost more than half of its value since hitting an all-time high of $69,000 in November.

Smaller cryptocurrencies, which tend to move in tandem with bitcoin, also slumped. Second-largest token ether fell 13% to its lowest since July 27.

FED NERVES

Nerves over the Fed’s meeting on Wednesday added to the mix. The U.S. central bank is expected to confirm it will soon start draining the massive pool of liquidity that has supercharged growth stocks in recent years.

Anxious markets are now even pricing in a small chance the Fed may hike interest rates this week, though the overwhelming expectation is for a first move to 0.25% in March and three more to 1.0% by year-end.

The meeting “is likely to see continued hawkishness with the Fed being more concerned over inflation risks and showing determination to reverse monetary easing more quickly,” analysts at MUFG wrote.

The prospect of higher borrowing costs and more attractive bond yields has taken a toll on U.S. tech stocks with their lofty valuations, leaving the Nasdaq down 12% so far this year and the benchmark down nearly 8%.

Such was the scale of the losses that Treasuries actually rallied late last week on speculation the bonfire of market wealth might scare the Fed into being less hawkish.

While Treasuries did bounce late last week, 10-year yields are still up 22 basis points on the month so far at 1.77% and not far from levels last seen in early 2020.

That rise has generally supported the U.S. dollar, which added 0.5% on a basket of currencies last week and last stood up 0.3% at 95.913 .