THE NEWS WRAP: Markets tank as more Russian troops move into Ukraine

Markets around the world have tumbled overnight, with Russia’s central bank forced to raise its lending rate 1.5 percentage points as investors dumped Russian stocks, as its incursion into Ukraine’s Crimean peninsula continues.

European markets are all down 2-3%, while gold is trading at a four month high and Brent crude (a benchmark oil price) is at a two month high.

“Investors had underestimated the risks of an escalation in Ukraine, so the events over the weekend are a wake-up call for the market,” said David Thebault, head of quantitative sales trading at Global Equities in Paris.

EU to hold emergency summit as Russia reportedly issues ultimatum

The European Union is set to hold crisis talks on Thursday amid reports Russian forces have issued an ultimatum to Ukrainian troops in Crimea to surrender or prepare for an assault.

Russia’s actions have been criticised by US President Barack Obama as US Secretary of State John Kerry heads to Ukraine in a bid to defuse the crisis.

“Over time this will be a costly proposition for Russia. And now is the time for them to consider whether they can serve their interests in a way that resorts to diplomacy as opposed to force,” Obama said.

Meanwhile, NATO is set to hold crisis talks after Poland raised concerns under article four of the NATO Treaty, citing concerns about further destabilisation in the region.

“The developments in and around Ukraine are seen to constitute a threat to neighbouring Allied countries and having direct and serious implications for the security and stability of the Euro-Atlantic area,” the alliance said.

Qantas could be split in half under Abbott proposal

Prime Minister Tony Abbott has announced a proposal that would amend the Qantas Sale Act, allowing the carrier to exceed 49% foreign ownership for its domestic arm while retaining the cap for its international business.

In his press conference, the prime minister also ruled out a bailout for the national carrier.

“The point I make to Bill Shorten and his colleagues is you sold Qantas, now you must free them to maximise their chances of being able to successfully compete and maximise Australian employment for the long-term,” Abbott said.

“If you look at the history of Qantas over the last decade or so it was hugely profitable for most of that time. That demonstrates to me that a well-managed Qantas is more than capable of competing, and not just surviving, but of flourishing. I think this decision that we’ve made today also says something significant about this government. We do not believe in government by chequebook.”

Overnight

The Dow Jones Industrial Average is down to 16144.5. The Aussie dollar is down to US89.26 cents.