Geopolitical tensions ahead of the weekend referendum in Ukraine’s Crimea region pushed financial markets down on Friday.
Moscow’s main share index at one stage fell five percent to its lowest since 2009 but ended the session down 1.4 percent.
The rouble also hovered near an all-time low.
Analysts said investors are worried about the effect that more sanctions against Moscow could have given how much Russian money is in the markets.
Companies which get a lot of their profits from Russia are suffering a sell-off – such as Finnish tyre maker Nokian Renkaat, and Danish brewer Carlsberg.
The pan-European FTSEurofirst 300 index, which rose 16 percent in 2013, closed down by 0.7 percent at 1,284.32 points – marking its lowest level since early February. The index also fell 3.2 percent over the week – marking its worst weekly loss since late January.
“Europe relies on Ukraine for a lot of its gas, so if there are problems in Ukraine, it will have an impact on Europe’s fragile economic growth,” said Caroline Vincent, European equities fund manager at Cavendish Asset Management.
As well as the tension in Ukraine, there are worries over the slowing pace of growth in China.
Oil prices rose, as did gold and the Japanese yen, which are both seen as safe havens.
The euro slipped against the yen, but rose compared with the weak dollar.
Russian central bank keeps rates on hold
Russia’s central bank on Friday kept lending rates on hold after raising them two weeks ago and said it would fight for financial stability after the standoff with the West over Crimea.
The bank took the emergency step on March 3 of raising its key rate by 150 basis points to 7.0 percent to stem capital flight after President Vladimir Putin said Russia had the right to invade Ukraine.
The Russian central bank said there would be no easing of rates in the months ahead, suggesting it expects more tough times ahead for the rouble and for shares, which have lost about a quarter of their value since mid-February.
The central bank has been forced to put on hold a long-promised shift towards inflation targeting, and this risks tipping the economy into recession as it tries to ensure financial market stability.
The rouble is down 11 percent against the dollar this year, adding pressure on consumer price inflation.