European markets are heading for a sharp decline on Monday as investors mull over economic risks in the region, fueled by concerns over energy supplies from Russia.
The pan-European Stoxx 600 fell 1.4% in early trading, with autos shedding 2.8% to lead the losses, with most sectors and major exchanges sliding deep into negative territory. Oil and gas stocks bucked the trend to add 1.3% as prices soared again.
The sharp decline in risky assets came after Russian energy giant Gazprom announced that gas flows to Europe via the Nord Stream 1 pipeline would be cut off indefinitely, citing additional repair needs.
European stocks rose on Friday to end a bruising week as investors reacted to a key U.S. jobs report that showed the U.S. economy added 315,000 jobs in August. The figure was just below the Dow Jones consensus estimate of 318,000, while the jobless rate rose to 3.7%, slightly above expectations of 3.5%.
The reading will help calm market fears that a much more buoyant labor market would give the Federal Reserve license to raise interest rates much more aggressively as it tries to tame inflation.
Overnight in Asia-Pacific markets, stocks were mixed as investors digested the results of a private survey of Chinese services activity that showed the sector rose in August.
U.S. markets are closed Monday for the Labor Day holiday.