© Reuters.

By Peter Nurse

Investing.com – European stock markets tumbled on Monday as investors worried about economic risks facing the region, including potential energy shortages as Russia cuts off gas supplies.

As of 03:55 ET (07:55 GMT), Germany was trading down 3.3%, France was down 2.4% and Britain was down 1.1%.

Russia announced late Friday that one of its main gas supply pipelines to Europe would remain closed indefinitely, scrapping the Saturday deadline for gas flows to resume through the pipeline.

The announcement came shortly after G-7 finance ministers agreed on a plan to impose a price cap on Russian oil exports, aimed at limiting the funds that the President’s government Vladimir Putin will host as the Russian invasion of Ukraine continues.

The Nord Stream pipeline was already running at just 20% capacity before flows were halted last week for maintenance. The move has already pushed up and will spark renewed fears of energy rationing in Europe as winter approaches.

Soaring energy prices can only add to inflation, which is already at Eurozone levels and rapidly approaching double digits.

That puts pressure on the United States to act, and policymakers are expected to respond on Thursday with a second, large interest rate hike, tightened before economic conditions deteriorate further.

That said, economic data showed that economic activity in the euro zone contracted further in August, with the S&P Global Index falling to 48.9 from 49.9 the previous month.

in the region could grow 0.4% from July, but this represents only a slight rebound from the 1.2% drop in the previous month. The release is expected to fall 0.7% in July.

Elsewhere, the foreign secretary is set to be named Britain’s new prime minister later on Monday, and she will have her hands full immediately with the county facing a cost of living crisis, industrial unrest and a prolonged recession.

In corporate news, Countryside Properties (LON:) stock soared more than 5% after the Wall Street Journal reported it was set to merge with fellow Briton Vistry (LON:), down 1.3%, to form a $3.2 billion residential developer.

Oil prices surged ahead of a meeting of major producers on Monday as traders reacted to the possibility of a production cut to support the market.

The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, meet later Monday and are expected to largely maintain current production levels despite still tight supplies.

However, Saudi Arabia, the de facto leader of the group, has recently floated the idea of ​​reducing production levels to support prices, and this potential is supporting the market.

Oil prices have fallen over the past three months, after hitting multi-year highs in March, on fears that interest rate hikes and COVID-19 curbs in parts of China, the top importer world of crude oil, slow global economic growth and dampen demand for oil.

As of 3:55 a.m. ET, futures were trading up 2.4% at $88.94 a barrel, while the contract was up 2.4% at $95.26.

Additionally, it fell 0.1% to $1,721.65/oz as it traded down 0.4% to 0.9912.