Portugal Colonial - Oil surges, equities mostly fall on growing Ukraine fears

Russian President Vladimir Putin's decision to send troops across the border last week has sent shivers through trading floors as investors fret over a protracted war in the resource-rich region.

Adding to the unease among investors was news that Putin had put his nuclear forces on a higher alert in reaction to the latest stiff measures.

Markets had rallied Friday as dealers assessed that the punishments imposed on Moscow were light enough to not hit its crucial oil exports -- Russia is the world's third-biggest producer -- at a time when supplies are thin and demand is surging.

But the picture was changed at the weekend, when the United States and European Union said they would exclude some Russian banks from the international bank payments system SWIFT and personally targeted Putin and Foreign Minister Sergei Lavrov.

They also banned all transactions with Russia's central bank, sending the ruble crashing, with Bloomberg saying it was indicated to be nearly 30 percent down in offshore trading Monday.

"Removing some Russian banks from SWIFT could result in a disruption of oil supplies as buyers and sellers try to figure out how to navigate the new rules," Andy Lipow, of Lipow Oil Associates in Houston, noted.

Crude surged, with WTI heading closer to the $100 mark, while Brent bounced back above that level after slipping on Friday.

Other commodities rallied, with wheat up eight percent, while aluminium and nickel were also sharply higher.

Traders will be closely watching a meeting this week of OPEC and other major producers led by Russia, where they will discuss plans for further output.

The group had agreed previously to increase production gradually each month, but the Ukraine crisis could throw those plans into disarray.

Gold and the yen, go-to assets in times of uncertainty, rose, while the dollar was up against all other currencies.

The euro was under pressure owing to Europe's reliance on Russian energy.

The surge in prices is adding to worries about inflation, which is running at a 40-year high in the United States, with central banks already fighting an uphill battle to get it under control.

The conflict is "likely to boost energy prices significantly, resulting in immediate inflationary effects and a large drag on global growth," Silvia Dall'Angelo, senior economist at Federated Hermes, wrote in a note.

"It's fair to say that the crisis increases the room for central banks' policy mistakes."

On equity markets Tokyo, Hong Kong, Shanghai, Seoul, Singapore and Bangkok were in negative territory, though there were some gains in Sydney, Manila and Wellington.

- Key figures around 0300 GMT -

West Texas Intermediate: UP 5.1 percent at $96.23 per barrel

Brent North Sea crude: UP 4.3 percent at $102.14 per barrel

Tokyo - Nikkei 225: DOWN 0.3 percent at 26,393.42 (break)

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 22,537.21

Shanghai - Composite: DOWN 0.2 percent at 3,445.92

Euro/dollar: DOWN at $1.1165 from $1.1271 late Friday

Pound/dollar: DOWN at $1.3359 from $1.3410

Euro/pound: DOWN at 83.57 pence from 84.04 pence

Dollar/yen: DOWN at 115.47 yen from 115.56 yen

New York - Dow: UP 2.5 percent at 34,058.75 (close)

London - FTSE 100: UP 3.9 percent at 7,489.46 (close)

J.Oliveira--PC