By Sruthi Shankar, Susan Mathew and Bansari Mayur Kamdar
(Reuters) -European stocks tumbled on Tuesday, kicking off March on a dour note on weak earnings reports and jitters over the Ukraine crisis as Russia raged on with its attack after ceasefire talks between the two nations failed to reach a breakthrough.
Oil prices were back above $100 per barrel and gold, bonds and the dollar surged as investors fled to safe havens.
Italy's financials-heavy benchmark sank 4.1% as banks lost 6.8%, while a slide in luxury names saw France's CAC 40 drop 3.9% and hit over five-month lows.
The indexes deepened recent losses as Russian rained down rockets in Ukrainian cities after ceasefire talks between Russia and its southern neighbour failed to reach a breakthrough on Monday.
Stock markets across the globe plunged on Monday after the West imposed tough sanctions on Russia, including preventing its central bank from using its $630 billion foreign reserve war chest.
"For Europe, the downside risks exceed upside at this point because the conflict is still raging on... Sentiment is still going to remain down in the dumps," said Craig Erlam, senior analyst at Oanda.
The pan-European STOXX 600 index dropped 1.7%, but a rally in healthcare and miners helped limit losses.
The travel and leisure sector dropped the most, down 7.5% after disappointing earnings from betting group Flutter.
"The combination of soaring oil prices and energy costs combined with the impact of sanctions that are being imposed and closing of airspace are all significant headwinds as far as airlines and travel are concerned," Erlam said.
Energy major Shell (LON:RDSa) and shipping firm Maersk slipped on cutting Russia exposure and halting operations, respectively.
Shares in pandemic winners including German online fashion retailer Zalando and meal-kit delivery firm HelloFresh dropped 9.6% and 7.8% respectively after downbeat profit forecasts.
Germany's DAX index slid 3.9%.
Europe Inc profits are expected to have risen 67.4% in the fourth quarter of 2021, data from Refinitiv I/B/E/S showed on Tuesday, as higher oil and gas prices boost the energy sector.
Meanwhile, IHS Markit's survey showed momentum in euro zone manufacturing growth waned slightly last month but activity was still strong and supply chain constraints eased.
German chemicals maker Covestro gained 2.3% after saying it had more than doubled its 2021 core profit and expected upbeat earnings for 2022.
Rheinmetall topped the STOXX 600 to extend gains on the prospect of a big boost to military spending in Germany. Its shares have surged close to 70% in the past six sessions.
Drugmaker AstraZeneca (NASDAQ:AZN) rose 1.8% on a $760 mln deal for an antibody-based drug with Swiss firm Neurimmune.