London - World share markets stalled on Monday as the threat of Scotland splitting from the rest of Britain leapt to the forefront of investors' attention, the latest in a recent run of geopolitical curveballs.
Sterling fell to a 10-month low against the dollar and British shares and government bonds led a cautious Europe lower after a weekend poll put the campaign for an independent Scotland in the lead - just 10 days before the final vote.
READ: Pound at 10-month low on Scot poll worries
With a ceasefire in Ukraine tentatively holding and markets underpinned by Chinese stimulus hopes and last week's salvo of ECB support measures, investors were left mulling a potentially messy divorce in the UK that, up until now at least, most had viewed as an unlikely.
The uncertainty wasn't confined to the UK either and gave the rest of Europe a reason to cash in on recent stock market gains.
Another eye-catching mover was Brent crude as it briefly fell below $100 a barrel, having posted its third weekly drop in four weeks last week.
READ: Benchmark Brent oil price falls
Traders fingered the breach on disappointing Chinese data which stoked speculation about whether authorities would have to loosen policy further to revive demand in the world's second biggest economy. But in Europe, attention was focused on Scotland's September 18 vote on whether to break away from the rest the United Kingdom.
A weekend poll showed the "Yes" to independence campaign on 51% versus 49% in the "No" camp.
Though it excluded those who would not vote and did not know how they would vote, it was the first time the split supporters had their noses in front and overturned the 22-point lead the unionist campaign had just a month ago.
It rattled sterling which saw its biggest fall in 13-months to as low as $1.6104, though it looked to have stabilised as early US currency market trading gathered momentum.
READ: Sterling under pressure from Scottish vote
London's FTSE was also the Europe's worst performing bourse down over 1% with 6 of its 10 biggest fallers based in Scotland, while bond markets saw UK yields tick up.
"The pound is predictably taking a hit, my base case is still that there won't be a split but should there be a 'yes' vote the pound will look vulnerable because of the 12 to 18 months of uncertainty that would lie ahead," said Neil Williams, chief economist at UK-based fund manager Hermes.
The broader European worry is that a split will increase the chance of what would be left of a not-so-United Kingdom leaving the European Union in a few years time - a much bigger upheaval.
READ: Weaker European stock markets outpace FTSE
It could also set the tone for a similar vote to leave Spain by Catalonia planned for November. The pan-European FTSEurofirst 300 was down 0.8% as it gave back roughly half of last week's advance.
Spanish bonds underperformed while UK market volatility was the highest since the country's 2010 election.
Oil under $100
S&P 500 was expected to inch back from Friday's record closing high when trading on Wall Street resumes later. Yahoo was one of the biggest movers in premarket trading, up 2.8% as traders geared up for the IPO of Chinese e-commerce giant Alibaba
initial public offering.
Risk sentiment was generally supported after Friday's lacklustre US jobs report was seen as keeping the Federal Reserve from raising US interest rates until at least the middle of next year.
READ: US employment growth smallest in eight months
High-flying emerging market stocks, which tend to be highly sensitive to US monetary policy predictions, were up 0.2% though there were other factors at play too.
Chinese markets were closed on Monday but Chinese trade data was released that supported bets on ongoing stimulus from Beijing.
An unexpected fall in imports raised concerns about tepid domestic demand. It compounded Friday's weaker US jobs numbers and saw Brent crude oil fall below $100 a barrel for the first time in 14 months, albeit briefly.
Safe haven-favourite gold was off a three-month low at $1 266 an ounce.
"The fall in prices is a temporary thing. They are still within the acceptable range," an Opec delegate from a Gulf country told Reuters."
In contrast to sterling's sharp moves, other major currencies were treading water.
The dollar was up a touch at ¥105.30, but remained shy of last week's its near six-year high of ¥105.71. The euro also steadied at $1.2946, holding above last week's 14-month low of $1.2920.
Net short positions in the euro ballooned in the week ended September 2, rising to their largest in more than two years, according to Commodity Futures Trading Commission data released on Friday.