Euro, Stocks Tumble as Russia Pulls Rug on Gas Supplies

European stocks dropped for the sixth time in seven days, and the euro sank to a 20-year low, after Russia escalated the continent’s energy crisis by shutting off key gas taps, signaling a long cold winter ahead for businesses and households in the region.

European nations led by Germany announced measures over the weekend to tackle a cost-of-living crisis and spiraling energy prices after Russian state gas producer Gazprom PJSC Friday said it would indefinitely halt supplies through the Nord Stream pipeline.

The common currency dropped as much as 0.8% to 98.78 US cents on Monday, the weakest since 2002, while the Stoxx Europe 600 fell 1.6% in early trade, trimming its 2% gain on Friday. German bonds, a haven asset, fluctuated.

“Euro has more downside given the full impact from the indefinite cut in Russia gas supply to Europe is yet to come,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. “No gas means no growth and a hawkish ECB.”

The energy crisis has been deepening since Russia’s invasion of Ukraine pushed commodity prices sharply higher and damaged relations between the Kremlin and Europe. This was a significant factor pushing the euro to parity with the dollar last month for the first time in two decades. The new strains on energy supplies ahead of the winter threaten to put a further drag on the regional economy at a time when soaring consumer prices are putting pressure on the ECB to tighten monetary policy.

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