LONDON: European equities rebounded Monday as investors seized on hopes of progress in peace talks between Russia and Ukraine, sending oil tanking alongside news of key crude consumer China's Covid lockdown on the tech hub of Shenzhen.
Europe shrugged off tech-fuelled Asian losses after Moscow said it made headway in peace talks with Kyiv ahead of Monday's latest round, reports AFP.
However the prospect of easing supply tensions and growing demand fears sent oil prices sliding more than five percent.
"Moscow claims substantial progress in peace talks while escalating conflict ... but that is enough for traders grabbing onto any good headline," said Markets.com analyst Neil Wilson.
The latest talks come more than two weeks after Russia's President Vladimir Putin ordered his army to invade its pro-Western neighbour.
This week's Federal Reserve meeting is also in focus as it prepares to start lifting interest rates to tackle decades-high inflation.
Back in Asia, traders are fretting that China's spreading coronavirus lockdowns could slam the Asian superpower's demand for crude.
"The rapid spread of Covid across China is now unsettling investors, with expectations that mass lockdowns will once again blight the economy," said Hargreaves Lansdown analyst Susannah Streeter.
She added that oil "demand (is) expected to take a hit if Chinese economic output falls".
Crude has continued to drop from last week's near 14-year peak close to $140 per barrel.
However, the commodity -- which oils the wheels of the global economy -- remains elevated, keeping major upward pressure on inflation.
The Fed's latest monetary policy gathering is expected to end Wednesday with the bank announcing a quarter-point interest rate hike.
The US central bank is trying to walk a fine line between trying to rein in runaway inflation while also trying to support the world's biggest economy in the face of the war in Ukraine, which many fear could lead to another recession.