By Alistair Smout

LONDON (Reuters) – The FTSE 100 fell to a two-week low on Monday, set for its biggest fall in over eight months as investors’ appetite for riskier assets fell due to the increasingly tense situation in Ukraine.

Banks, insurers, mining and energy stocks were among the big fallers after Ukraine mobilised for war following Russian President Vladimir Putin’s declaration that he had the right to invade his neighbour. The confrontation over Ukraine is the most serious between Moscow and the West since the Cold War.

“I was already bearish in the near-term, and the situation in Ukraine is supporting this view, Fawad Razaqzada, technical analyst at Gain Capital, said, adding that a close below the 6,700 level would suggest further falls in coming sessions.

“This is a key level of support, as previously it was resistance, and we have the 50-day moving average there as well as the 38.2 percent retracement of the rally from early February,” he said, referring to a Fibonacci “golden ratio” that chartists use to analyse the likely depth of a pullback.

The FTSE 100 was down by 132.80 points, or 2 percent, at 6,676.90 by 1142 GMT, set for its biggest daily fall since last June.

Only five stocks were in positive territory, with precious metal miners Randgold and Fresnillo the top risers, benefiting from a flight to safety that boosted the gold price.

Companies with direct exposure to Russia were the hardest hit.

Oil major BP, which has a significant stake in Russia’s biggest oil producer Rosneft, fell more than 2 percent, alone trimming 8 points off the index, on concerns of an escalation in tensions.

Rosneft shares slumped more than 8 percent.

“Clearly the market is in a risk-off mode on the back of the geopolitical developments, the most concerning for Europe since the end of the cold war. All eyes will be on whether it spreads,” said Daniel McCormack, strategist with Macquarie.

“But I doubt that there will be a major sell-off as a result of this. It appears that the West is not going to intervene militarily, so this escalating into a full-blown war is very unlikely.”

Gold miners aside, miners suffered. The UK mining index fell 2 percent, hurt by geopolitical concerns and weakness in copper, which slipped on data showing a further drop in factory activity in China, the world’s top metals consumer.

The final Markit/HSBC manufacturing Purchasing Managers’ Index (PMI) for China fell to a seven-month low of 48.5 in February from January’s 49.5, its third straight monthly decline, reinforcing concerns of a slowdown in the world’s second-largest economy.

(Additional reporting by Atul Prakash)