By Elizabeth Howcroft

LONDON (Reuters) – Stocks came under renewed pressure and oil spiked further on Wednesday, as Russia showed no signs of stopping its assault on Ukraine.

A week after Russian President Vladimir Putin ordered a full-scale invasion of its neighbour, the bombardments of Ukrainian cities continued while Western nations tightened sanctions on Moscow.

U.S. President Joe Biden banned Russian planes from U.S. air space, warning Putin had “no idea what’s coming.”

European stock indexes were in their second day of falls, with the STOXX 600 down 0.7% at 0857 GMT, while Germany’s DAX was down 1.2% on the day.

European banking shares slid further after the European arm of Russia’s Sberbank was forced to close.

The MSCI world equity index, which tracks shares in 50 countries, was down 0.4%.

Russia said its forces took control of the first sizable Ukrainian city on Wednesday, seizing Kherson, in the south, as fighting raged around the country.

“The fact that it’s lasting, the fact that it’s becoming more brutal, is clearly changing the growth outlook and that’s what we’ve seen in terms of market reacting, equities going down and bonds rallying quite significantly,” said Antoine Lesne, head of ETF strategy and research at State Street’s SPDR ETF.

Oil prices surged, with Brent crude touching $113.02 – its highest since 2014 – and U.S. crude coming close to passing its 2013 peak.

The U.S. 10-year yield was at 1.7258%, having dropped sharply in the previous two sessions.

SPDR’s Lesne said exchange-traded fund (ETF) flows in the United States rose last week as investors used them to take risk-off positions, but in Europe flows were “more muted.” Lesne said he had not suspended any funds with exposure to Russia.

The best performing ETFs were those exposed to European healthcare and utilities, he said, as well as energy-linked ETFs.

Top asset manager BlackRock Inc said on Tuesday it was consulting with regulators, index providers and other market participants to help clients exit their positions in Russian securities where allowed.

The rouble was down around 3.5% on the day versus the dollar, at 108.6, having weakened to a record low of 117 per dollar on Tuesday.

Foreign investors are effectively stuck with their holdings of rouble-denominated bonds, known as OFZs, after the Russian central bank put a temporary halt on coupon payments and a major overseas’ settlement system stopped accepting Russian assets.

The U.S. dollar index was up 0.5%, having touched its highest since mid-2020, as investors sought safer assets.

The euro was down 0.5% at $1.1068, and hit a new seven-year low against the Swiss franc.

Euro zone government bond yields stabilised, having seen a dramatic repricing on Tuesday when traders scaled back their bets on the European Central Bank (ECB) hiking rates this year.

On Wednesday, euro zone money markets were back to pricing in 20 basis points (bps) of ECB rate hikes by December.

The German 10-year yield was up 4 bps on the day, edging up slightly after Tuesday’s sharp drop.

While attention remains focused on Ukraine, investors will also be watching preliminary euro area HCIP inflation data, which is expected to show inflation rose to 5.4% in February.

(Reporting by Elizabeth Howcroft; Editing by Mark Potter)