TOKYO Escalating political tensions in Ukraine pressured Asian stocks on Monday, forcing anxious investors to cut their exposure to riskier assets in favor of traditional safe haven bets such as the Japanese yen and Swiss franc.
Ukraine mobilized for war on Sunday and Washington threatened to isolate Russia economically, after President Vladimir Putin declared he had the right to invade his neighbor, in the biggest confrontation between Russia and the West since the Cold War.
Russian forces have already bloodlessly seized Crimea, an isolated Black Sea peninsula where Moscow has a naval base.
The tensions come at a nervous time for markets, hit by signs of slowing growth in China, the tapering of the U.S. Federal Reserve's stimulus and stress in emerging market assets.
Australian shares were off 0.2 percent , and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was also down by a similar margin. U.S. stock futures fell 0.7 percent.
The turmoil in Ukraine also sent Japan's Nikkei futures down more than one percent with investors seeking shelter in government bonds. U.S. Treasury-note futures prices gained 16/32.
"It's a reaction to the escalation in tension in Ukraine over the weekend ... the traditional risk proxies are getting hit, and the safe havens are getting bid," said ANZ currency strategist Sam Tuck in Auckland.
The dollar dropped to as low as 101.30 yen in early trade, its weakest since February 6, and last traded at 101.57 yen, about 0.2 percent below levels late last week.
The euro also shed 0.2 percent against the dollar to $1.3778, as the euro zone economy is seen as vulnerable because of its dependence on gas supplies from Russia via Ukraine.
Against the Swiss franc, the single currency dropped to a 14-month low of 1.2116 franc.
Concerns about gas supply also boosted Brent crude, the European oil benchmark, more than one percent to $110.20.
Putting further strain on riskier assets, a government survey on Saturday showed activity in China's factory sector slowed to an 8-month low in February, reinforcing signs of a modest slowdown in the world's second biggest economy.
The official Purchasing Managers' Index edged down to 50.2 in February from January's 50.5, the National Bureau of Statistics said on Saturday, just ahead of market expectations of 50.1.
(Editing by Shri Navaratnam)