Sawt Falasteen - Stocks buckle as Ukraine fears linger

Asia's main equity markets closed lower after a steep drop on Wall Street Thursday fuelled by renewed fears that Russia would soon invade Ukraine, adding to long-running angst about the Federal Reserve's plans to hike interest rates.

On Friday, US stock markets retreated in early trading, with the Dow Jones Industrial Average shedding 0.3 percent. The S&P 500 and tech-heavy were briefly in the green after opening but fell minutes later.

London's FTSE 100 and the Paris CAC 40 fell in afternoon trading after being in the black earlier in the day. Frankfurt was also down.

"Markets continue to chop around on these Russia headlines", said Neil Wilson, analyst at Markets.com.

Shellfire rang out near the frontline between government forces and rebel-held territory in eastern Ukraine, as Kyiv and Washington accused Russia of seeking to provoke an incident to falsely justify an invasion.

Russian President Vladimir Putin, who will oversee a ballistic missile drill this weekend, warned of a "deterioration of the situation" in eastern Ukraine.

US President Joe Biden will hold talks with Western allies on Friday to discuss Ukraine.

"The markets may be getting some relief as Secretary of State Antony Blinken is expected to meet with Russian Foreign Minister Sergei Lavrov next week," said a note by analysts at Charles Schwab investment firm.

- Oil prices slump -

The crisis over Ukraine comes as traders continue to contend with the prospect of US interest rates rising sharply this year as the Fed tries to rein in inflation at a 40-year high.

After spending most of last year saying surging prices would be transitory, the US central bank is now in full-on firefighting mode.

But commentators fear it may be behind the curve and will have to act more stringently than previously thought.

While tensions in Eastern Europe continue to absorb most of the attention, oil prices extended losses as traders grow increasingly optimistic of a deal on Iran's nuclear programme that could see it restart crude exports.

"Reports of the US and Iran nearing a new nuclear deal couldn't have come at a better time and oil prices are slipping at the prospect of more than a million barrels of crude re-entering the market," noted Craig Erlam, senior market analyst at OANDA trading group.

"In the absence of a deal, we could already be talking about triple-figure oil prices."

Oil prices on Friday lost two percent, with the WTI contract dropping under the $88 mark.

- Key figures around 1435 GMT -

New York - Dow: DOWN 0.3 percent at 34,214.24 points

London - FTSE 100: DOWN 0.1 percent at 7,529.40

Frankfurt - DAX: DOWN 1.1 percent at 15,093.88

Paris - CAC 40: DOWN 0.3 percent at 6,928.68

EURO STOXX 50: DOWN 0.8 percent at 4,079.65

Tokyo - Nikkei 225: DOWN 0.4 percent at 27,122.07 (close)

Hong Kong - Hang Seng Index: DOWN 1.9 percent at 24,327.71 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,490.76 (close)

West Texas Intermediate: DOWN 2.1 percent at $88.15 per barrel

Brent North Sea crude: DOWN 2.0 percent at $91.16 per barrel

Euro/dollar: DOWN at $1.1342 from $1.1366 late Thursday

Pound/dollar: DOWN at $1.3596 from $1.3615

Euro/pound: DOWN at 83.42 pence from 83.44 pence

Dollar/yen: UP at 114.99 yen from 114.91 yen

A.AbuSaada--SF-PST