KYIV/MOSCOW, Feb 27 (Reuters) – President Vladimir Putin put Russia’s nuclear deterrent on high alert on Sunday in the face of a barrage of Western reprisals for his war on Ukraine, which said it had repelled Russian ground forces attacking its biggest cities.

The United States said Putin was escalating the war with “dangerous rhetoric”, amid signs that the biggest assault on a European state since World War Two was not producing rapid victories, but instead generating a far-reaching and concerted Western response.

Less than four days after it started, the invasion has triggered a Western political, strategic, economic and corporate response unprecedented in its extent and coordination.

“With this war on Ukraine, the world will never be the same again,” EU’s foreign policy chief Josef Borrell wrote in an opinion piece in the Guardian newspaper.

“It is now, more than ever, the time for societies and alliances to come together to build our future on trust, justice and freedom. It is the moment to stand up and to speak out. Might does not make right. Never did. Never will,” he said.

The 27-nation European Union on Sunday decided for the first time in its history to supply weapons to a country at war. A source told Reuters it would send 450 million euros ($507 million) of weaponry to Ukraine. Borrell at a news conference said EU’s support would include providing fighter jets.

The European Union’s chief executive Ursula von der Leyen expressed support for Ukraine’s membership in an interview with Euronews, saying “they are one of us.” read more Ukraine, a democratic nation of 44 million people, won independence from Moscow in 1991 at the fall of the Soviet Union and has pushed to join the NATO Western military alliance and the EU, goals Russia vehemently opposes.

The rouble plunged nearly 30% to an all-time low versus the dollar early on Monday, after Western nations on Saturday unveiled harsh sanctions including blocking some banks from the SWIFT international payments system. On Sunday, the president of neutral Switzerland said he expected his government to follow the EU with Russia sanctions and freezing Russian assets. read more

NEGOTIATIONS

The Ukrainian president’s office said negotiations with Moscow without preconditions would be held at the Belarusian-Ukrainian border. Russian news agency Tass later on Sunday cited an unidentified source as saying the talks would start on Monday morning.

As missiles fell on Ukrainian cities, nearly 400,000 civilians, mainly women and children, have fled into neighbouring countries, a U.N. relief agency said. Hundreds were stranded in Kyiv on Sunday waiting for trains to take them west, away from the fighting.

The capital remained in Ukrainian government hands, with President Volodymyr Zelenskiy rallying his people daily despite Russian shelling of civilian infrastructure.

The EU shut all Russian planes out of its airspace, as did Canada, forcing Russian airline Aeroflot to cancel all flights to European destinations until further notice. With flight options dwindling, the United States and France urged their citizens to consider leaving Russia immediately. read more

The EU also banned the Russian media outlets RT and Sputnik.

Germany, which had already frozen a planned undersea gas pipeline from Russia, said it would increase defence spending massively, casting off decades of reluctance to match its economic power with military clout. read more

British oil major BP BP, the biggest foreign investor in Russia, said it was abandoning its stake in state oil company Rosneft (ROSN.MM) at a cost of up to $25 billion, shrinking its oil and gas reserves in half. read more

Several European subsidiaries of Sberbank Russia, majority owned by the Russian government, were failing or were likely to fail due to reputational cost of the war in Ukraine, the European Central Bank, the lenders’ supervisor, said. read more

‘NOT DETERRENCE BUT THREAT’

At least 352 civilians, including 14 children, have been killed and 1,684 people have been wounded, Ukraine’s Health Ministry said.

Putin, who has called the invasion a “special operation”, thrust an alarming new element into play when he ordered Russia’s “deterrence forces” – which wield nuclear weapons – onto high alert.

He has justified the invasion by saying “neo-Nazis” rule Ukraine and threaten Russia’s security – a charge Kyiv and Western governments say is baseless propaganda.

On Sunday, he cited aggressive statements by NATO leaders and the raft of economic sanctions imposed on Russia by the West.

“Not only do Western countries take unfriendly measures against our country in the economic dimension – I mean the illegal sanctions that everyone knows about very well – but also the top officials of leading NATO countries allow themselves to make aggressive statements with regards to our country,” he said on state television.

Putin previously referred to his nuclear arsenal in a speech announcing the start of the invasion on Thursday, saying Russia’s response to any country that stood in its way would be immediate and carry “consequences that you have never encountered in your history”.

The EU’s Borrell said Russia had clearly threatened a nuclear attack on countries supporting Ukraine after the invasion. “We are afraid that Russia is not going to stop in Ukraine,” he said.

U.S. Ambassador to the United Nations Linda Thomas-Greenfield, at the U.N. Security Council, urged “Russia to tone down this dangerous rhetoric regarding nuclear weapons.”

A U.S. defence official said Washington was trying to assess what Putin’s announcement meant, but that it increased the danger from any miscalculation. read more

Moscow acknowledged that Russian soldiers had been killed and wounded, but said its losses were far lower than those suffered by Ukraine, the Interfax news agency reported. Moscow has not released casualty figures.

In New York, the U.N. Security Council convened a rare emergency meeting of the U.N. General Assembly, or all the United Nations’ 193 member states, for Monday.

Rolling protests have been held around the world against the invasion, including in Russia, where almost 6,000 people have been detained at anti-war protests since Thursday, the OVD-Info protest monitor said. read more

Tens of thousands of people across Europe marched in protest, including more than 100,000 in Berlin. read more

BATTLE FOR KHARKIV

A Ukrainian state news agency said that Russian troops had blown up a natural gas pipeline in Kharkiv, Ukraine’s second largest city, sending a burning cloud into the sky.

Soon after, Russian armour rolled into Kharkiv, in northwest Ukraine, and witnesses reported firing and explosions. But city authorities said the attack had been repelled.

Reuters was unable to corroborate the information.

Ukrainian forces also appeared to be holding off Russian troops advancing on Kyiv but the Ukrainian armed forces described Sunday as “a difficult time”, saying Russian troops “continue shelling in almost all directions”.

Satellite imagery released by the private Maxar Technologies taken on Sunday showed a 5 km (3.25 mile) long convoy of Russian ground forces including tanks approximately 40 miles (64 km) away heading towards Kyiv. Reuters could not independently verify the images.

“We have withstood and are successfully repelling enemy attacks. The fighting goes on,” Zelenskiy said in the latest of several video messages from the streets of Kyiv. read more

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Feb 27 (Reuters) – European nations and Canada moved on Sunday to shut their airspace to Russian aircraft, an unprecedented step aimed at pressuring President Vladimir Putin to end his invasion of Ukraine, the biggest attack on a European state since World War Two.

Aeroflot said it would cancel all flights to European destinations after E.U. foreign policy chief Josep Borrell said the European Union had decided to close its airspace to Russian traffic.

The United States is mulling similar action, but has yet to make a final decision, according to U.S. officials. The U.S. government said citizens should consider leaving Russia immediately on commercial flights, citing an increasing number of airlines cancelling flights as countries closed their airspace to Russia.

The ban on Russian jets comes as the airline industry continues to grapple with the fallout from the COVID-19 pandemic that is still undermining global demand for travel.

Germany, Spain and France joined Britain, the Nordics and Baltic states in declaring bans on Russian use of their airspace, a major escalation in a tactic by mostly NATO allies to wage economic war against Putin in retaliation for the invasion.

The West, led by the United States, also unveiled sweeping new financial sanctions on Russia, which has called its assault on Ukraine a “special operation” to capture “neo-Nazis” who Putin says threaten Russia’s security – a charge Kyiv and Western governments say is baseless propaganda. read more

Russia is now widely expected to retaliate further against the air blockades and other sanctions. It has already responded to the earliest European airspace bans with its own edicts barring airlines from Britain, Bulgaria and Poland.

Without access to Russia’s airways, experts say carriers will have to divert flights south while also avoiding areas of tension in the Middle East.

A reciprocal airspace ban by Russia and the United States would cause longer flight times for U.S. carriers and could require crew changes on East Coast routes to Asia, said U.S.-based analyst Robert Mann of R.W. Mann & Company, Inc.

It could make certain flights too costly to operate for U.S. carriers. “It would just add a lot of expense,” he said.

WILL WASHINGTON FOLLOW?

“France is shutting its airspace to all Russian aircraft and airlines from this evening on,” French Transport Minister Jean-Baptiste Djebbari said in a Twitter post, an announcement echoed across continental Europe.

Air France-KLM (AIRF.PA) said it is suspending flights to and from Russia as well as the overflight of Russian airspace until further notice as of Sunday.

Earlier, Germany’s transport ministry said it would close its airspace to Russian planes and airlines for three months from Sunday, with the exception of humanitarian aid flights.

The closure of European airspace to Russian airlines and vice versa had immediate impacts on global aviation.

Air France said it was temporarily suspending flights to and from China, Korea and Japan, while it “studies flight plan options to avoid Russian airspace, in compliance with French and international authorities’ directives.”

Finnair said a Russian retaliation on Finland’s airspace ban would prolong flight times so much that it would not be viable to operate its Asian flights.

If U.S. airlines were barred from Russian airspace, it would lengthen some international flights and some would likely be forced to refuel in Anchorage, industry sources told Reuters. The flights that could be impacted include U.S. flights to India, China, Japan and Korea, the sources said.

The White House National Security Council declined to comment on whether the United States will close its skies to Russia and referred questions to the Federal Aviation Administration, which did not immediately comment.

Swiss International Air Lines, a unit of Germany’s Lufthansa

Canada also said it had shut its airspace to Russian aircraft effective immediately. read more

A spokesperson for Canada’s transport minister said there are no direct flights between Russia and Canada, but several Russian flights a day pass through Canadian airspace.

The aviation sanctions also spell disruption for logistics companies and the mainly Ireland-based aircraft leasing industry.

U.S.-based United Parcel Service Inc (UPS.N) and FedEx Corp (FDX.N), two of the world’s largest logistics companies, have said they are halting deliveries to destinations in Russia. It was unclear whether both firms continue to use Russian airspace as part of their general operations. Neither responded immediately to requests for comment.

Airfinance Journal reported EU-based lessors would be given until March 28 to wind down deals with Russian airlines – a setback for the industry after Russian carriers were seen as more reliable performers on jet rental agreements than many global carriers during the pandemic.

Russian companies have 980 passenger jets in service, of which 777 are leased, according to analytics firm Cirium. Of these, two thirds, or 515 jets, with an estimated market value of about $10 billion, are rented from foreign firms.

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LONDON, Feb 27 (Reuters) – Russian exports of all commodities from oil and metals to grains will be severely disrupted by fresh Western sanctions, dealing a blow to Russia’s economy and hurting the West with a spike in prices and inflation, traders and analysts said.

The United States and its allies on Saturday moved to block certain Russian banks’ access to the SWIFT international payment system in further punishment to Moscow as it continues its military assault against Ukraine. read more

While some Russian banks – including Gazprombank, which services large oil and gas payments – have escaped full blocking sanctions, traders and analysts said the time it takes to switch to new systems will still mean major upheavals to flows.

The measures, which will include restrictions on the Russian central bank’s international reserves, will be implemented in the coming days, with officials saying some exemptions for energy were being worked out.

“While trying to exempt energy transactions, SWIFT can still cause significant disruption to energy trade flows in the near term, at least until buyers switch to alternatives like Telex or other systems,” said Amrita Sen, co-founder of the Energy Aspects think-tank.

“On other commodities – I can’t see how trade continues without the exemptions,” she said.

SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is a secure messaging system that facilitates rapid cross-border payments, transferring trillions of dollars a year in what has become the principal mechanism for financing international trade.

Russia produces 10% of global oil and supplies 40% of Europe’s gas. It is the world’s largest grains and fertilisers exporter, top palladium and nickel producer, third-largest exporter of coal and steel, and fifth-largest wood exporter.

The bid to exclude from the trading system whole chunks of the world’s 11th largest economy – and supplier of one-sixth of all commodities – has no precedent in the globalised age.

It comes as the West is struggling with record high energy prices amid galloping inflation. read more

CLARITY SOUGHT

At least 10 oil and commodities traders, who spoke to Reuters on condition of anonymity, said flows of Russian commodities to the West will be severely disrupted or totally halted for days if not weeks until some clarity is established on exemptions.

“You can still use internal systems of international banks having branches in Russia, but it will be quite a mess,” said a banker with a large Western bank with exposure to Russia, asking not to be named due to the sensitivity of the issue.

Some traders said while Russian banks that were still off the sanctions list, such as Surgutneftegasbank, could probably clear dollars, that did not necessarily solve the problem.

“Lots of companies will treat Russian oil as sanctioned and not touch it even if it is allowed,” said a senior executive from a major Western oil trading desk, also asking not to be named due to the sensitivity of the matter.

“So it feels like maximum pain for the next two to three days while people work out what pathways are open,” he added.

Russian energy and commodity flows to Asia, especially to China, will likely continue.

Both China and Russia have been developing alternatives to SWIFT. Beijing has been encouraging the use of its homegrown alternative, known as the CIPS clearing and settlement services system, while Moscow has set up its own banking messaging system, known as SPFS.

Russian officials have said the country can re-route its exports to China in case flows to the West are disrupted. But analysts have said gas cannot be re-routed at all, while Beijing’s capacity to take more oil is limited.

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NEW YORK/LONDON Feb 26 (Reuters) – Investors were preparing on Saturday for more wild gyrations in asset prices after Western nations announced a harsh set of sanctions to punish Russia for its invasion of Ukraine, including blocking some banks from the SWIFT international payments system.

New measures announced by the United States, Britain, Europe and Canada also include restrictions on the Russian central bank’s international reserves. The moves will be implemented in the coming days. read more

Investors have feared Russia would get kicked off SWIFT, the world’s main international payments network, as this would disrupt global trade and hurt Western interests as well as hit Russia. read more

“It means there is going to be a catastrophe on the Russian currency market on Monday,” said former Russian Central Bank Deputy Chairman Sergei Aleksashenko. “I think they will stop trading and then the exchange rate will be fixed at an artificial level just like in Soviet times.”

Michael Farr, chief executive of financial consulting firm Farr, Miller & Washington LLC, said of the impact on global markets, “This could be a surprise that is not taken very well if it means a slowdown in international trade.”

The news comes after a week when worries over the intensifying conflict in Ukraine shook markets across the world. Stocks tumbled and oil prices soared as investors rushed to gold, the dollar and other safe havens.

Many of those safety moves were at least partially unwound on Thursday and Friday, and U.S. stock markets rallied to close up for the week. read more

The latest measures could send markets on another wild ride, as traders assess the implications for the global economy, including potentially higher commodity prices and inflation. The war between Russia, one of the world’s biggest raw materials’ exporters, and Ukraine has already helped push up oil prices to their highest level since 2014.

The S&P 500 is off 8% for the year to date, dragged down by worries over geopolitical strife and a more hawkish Federal Reserve.

“A lot of traders were kind of becoming convinced that the U.S. and Europe were not taking a hard stance,” said Edward Moya, senior market analyst at OANDA. “This action will be really difficult to digest and it will really pick a nerve for a lot of investors. … A lot of the rebound we saw in the latter half of last week will be tested.”

Mohamed El-Erian, part-time chief economic adviser at Allianz and chair of Gramercy Fund Management, said excluding Russia from SWIFT “has the potential to cripple the economy there” if done comprehensively.

“Inevitably there would be spillovers and spillbacks, including more of a stagflationary impetus to the global economy and greater likelihood of Russian arrears to Western companies and creditors,” he said, in emailed comments.

Tom Martin, senior portfolio manager at Globalt Investments, said the move is going to continue fueling demand for gold, Treasuries and other popular destinations for nervous investors.

“SWIFT is going to be painful and the markets are going to recognize that,” he said. “What you are going to get is continued volatility as all the participants are going to be adjusting their risk tolerance.”

One likely casualty will be the Russian rouble, investors said. Russia’s currency fell to an all-time low against the U.S. dollar in the past week, though it pared some of those losses on Friday.

“With the central bank likely to face severe constraints on currency intervention, the rouble will struggle to find a bottom,” said Karl Schamotta, chief market strategist at Corpay. “No one wants to catch a falling knife.”

Some investors, however, said the markets could put a positive spin on the fresh measures as Western troops had not joined the war.

“It’s the closest thing to a declaration of war from a financial perspective,” said Ross Delston, a U.S. lawyer and former banking regulator. “It’s going to result in Russia being viewed as radioactive by U.S. and EU banks, which in turn would be a major barrier to trade with Russia.”

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