Asian shares fell on Tuesday amid a potential Russian invasion of Ukraine. The US has warned Russia of severe consequences in case its forces invade Ukraine and insisted on a diplomatic solution to the issue.

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MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent in early trade after stock markets in the United States and Europe lost ground on Monday.

Japan's Nikkei was down 0.2 percent while Australia's S&P/ASX200 was down 0.32 percent. China's CSI300 bucked the trend and was up 0.2 percent, while Hong Kong's Hang Seng shed 0.52 percent early in the session.

"Geopolitical risk will be the clear driver of sentiment for markets this week," Reuters quoted as saying Marcella Chow, global markets strategist at JPMorgan Asset Management.

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On the Wall Street, Dow Jones closed 0.49 lower, S&P 500 lost 0.38 percent, while tech-heavy Nasdaq closed flat, losing just 0.24 point. Oil prices hit seven years high on Monday on Russia-Ukraine tensions but weakened slightly during the Asian session.

The United States warned on Monday that Russia could soon invade Ukraine. Secretary of State Antony Blinken said the US embassy would be relocated from Kyiv to Lviv, citing the "dramatic acceleration the buildup of Russian forces"

"So far, the market is just keeping a watchful eye and it doesn't appear to have had much impact. This could change dramatically if the Russians do attack Ukraine," said James Rosenberg, EL&C Baillieu financial adviser.

The Group of Seven large economies (G7) warned of "economic and financial sanctions which will have massive and immediate consequences on the Russian economy".

Global index provider MSCI Inc said it was monitoring developments in Ukraine and access to the Russian equity market.

The yield on benchmark 10-year Treasury notes was at 1.9753 percent compared with its US close of 1.996 percent on Monday. The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 1.562 percent compared with a US close of 1.589 percent.

US crude dipped 0.61 percent to $94.88 a barrel during the Asian session after notching a seven-year high. Brent crude was down 0.4 percent at $96.12 per barrel. Gold was slightly higher. Spot gold was traded at $1,870.92 per ounce.

-With agency inputs

(Edited by : Bivekananda Biswas)

First Published:Feb 15, 2022 8:08 AM IST