Volkswacht Bodensee - Stocks sink on fears of Ukraine-Russia escalation

Moscow vowed to react "accordingly" after saying Ukraine had fired its first US-made missile onto Russian territory after being cleared to do so by US President Joe Biden.

Threats of a nuclear response by Russia to a conventional attack sent further chills through trading rooms, as Russia also vowed to defeat its neighbour.

"The news rattled markets this morning, driving European stocks lower and reinforcing bearish momentum" against the euro, said Fawad Razaqzada, market analyst at Forex.com.

"We are getting close to very dangerous territories," he said.

It was a marked reversal of the optimism seen on Wall Street on Monday, when stocks shrug off uncertainty over Donald Trump's tax and tariff plans to push higher, with the momentum carrying over into the Asian trading day.

Hong Kong and Shanghai in particular closed higher on hopes China will unveil more stimulus aimed at kickstarting its economy and property sector in particular.

On the corporate front, shares in German industrial giant Thyssenkrupp rose about eight percent after the group said it expected a return to profit in its next financial year -- despite posting a hefty full-year loss for the second year in a row.

Nestle slid 2.1 percent after new chief executive Laurent Freixe announced a plan to slash costs and have a standalone water and beverages business.

Equities have seen big swings since Trump was elected US president this month, as investors gauge the impact of tax cuts and a potential trade war with China and others.

Any resulting surge in inflation would give a headache to policymakers at the US Federal Reserve who are still fighting to bring prices under control.

Traders are scaling back their bets on how many more interest-rate cuts the Fed will announce in the coming year.

Looking ahead, markets are waiting for the quarterly earnings release from AI chip giant Nvidia on Wednesday, which could determine whether the optimism bubbling through technology sectors will prove sustainable.

- Key figures around 1445 GMT -

New York - Dow: DOWN 0.7 percent at 43,081.29 points

New York - S&P 500: DOWN 0.4 percent at 5,870.02

New York - Nasdaq: DOWN 0.2 percent at 18,757.69

London - FTSE 100: DOWN 0.4 percent at 8,074.40

Paris - CAC 40: DOWN 1.4 percent at 7,176.81

Frankfurt - DAX: DOWN 1.4 percent at 18,9930.43

Tokyo - Nikkei 225: UP 0.5 percent at 38,414.43 (close)

Hong Kong - Hang Seng Index: UP 0.4 percent at 19,663.67 (close)

Shanghai - Composite: UP 0.7 percent at 3,346.01 (close)

Euro/dollar: DOWN at $1.0586 from $1.0600 on Monday

Pound/dollar: DOWN at $1.2652 from $1.2678

Dollar/yen: DOWN at 154.09 yen from 155.04 yen

Euro/pound: UP at 83.68 pence from 83.57 pence

West Texas Intermediate: UP 0.3 percent at $69.40 per barrel

Brent North Sea Crude: UP 0.3 percent at $73.52 per barrel

P.Keller--VB