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Tokyo - Asian shares hovered around one-month lows on Monday as Western countries issued fresh warnings of more sanctions on Moscow after Crimea voted overwhelmingly to break from Ukraine to join Russia, as expected.
Japan's Nikkei led losses with a fall of 0.7%, sliding to a one-month low while US stock futures dropped as much as 0.5% to three-week lows before paring its decline.
The MSCI's broadest index of Asia-Pacific shares outside Japan was flat, staying near Friday's one-month low. Last week it fell 2.9%, its biggest slide in more than six months.
European shares are expected to slip when they open on Monday, with Germany's DAX seen falling as much as 0.2% from a five-month low hit last week.
"The markets were expecting Crimea to agree to join Russia. So that alone is unlikely to move markets. The focus is on what kind of actions Russia and the West will take next," said Tohru Sasaki, the head of Japan rates and FX research at JPMorgan Chase.
Crimea's Moscow-backed leaders declared a 96% vote in favour of quitting Ukraine and annexation by Russia. Western powers said the referendum was illegal and they will impose sanctions quickly.
President Barack Obama, rejecting the referendum result, warned Russian President Vladimir Putin that the United States was ready to impose sanctions on Moscow, in the gravest crisis in East-West relations since the Cold War.
"We have to see what kind of sanctions the West will take. Obviously more Russians may feel they want to move their assets out of the dollar to safer assets," said a proprietary trader at a Japanese bank.
Indeed, a record decline in foreign holdings of US Treasuries published on Friday has led to speculation Russia may have already stashed away its dollar reserves ahead of possible sanctions from the West.
Escalating tension between the West and Russia is raising fear of a major disruption to the global economy, with investors unsure when and how the crisis will be settled.
"If people start to review the optimistic consensus on the global economy at the start of year, we could see more than a minor adjustment in risk assets," the Japanese bank trader said.
In contrast, gold, seen as a safe haven at a time of crisis as it is not backed by any states, briefly rose to a six-month high of $1 391.76 per once, adding to last week's 3% gain. It last stood at $1 383.11.
The Japanese yen, often used as a funding currency for investment in higher-yielding assets, also traded near the top of its range in the past month and a half, with the dollar fetching ¥101.4, not far from this year's low around ¥100.8.
The euro stood at $1.3907, off a two-and-a-half year high around $1.3967 reached last Thursday after European Central Bank chief Mario Draghi spoke of concerns about the strength of the common currency.
The yuan weakened after Beijing announced on Saturday it was doubling its daily trading range from Monday, adding purpose to the promise it would allow market forces a greater role in the economy and markets.
Yuan loses ground as China widens trading band
In the onshore market, the yuan dropped 0.2% to 6.1642 to the dollar while the offshore yuan in Hong Kong hit a 10-month low of 6.1624 to the dollar.
Analysts said the widening of the trading band was a sign of confidence that the central bank had successfully fought off a plague of currency speculators, and at the same time signalled that regulators believe the economy is stable enough to handle more financial reform.
Elsewhere, US wheat futures rose nearly 1% to edge near a four-and-a-half month high hit on Thursday on concern about possible disruption in production and transportation of wheat in Ukraine, a major wheat grower.
On the other hand, copper found some calm after a sharp fall earlier this month, with London copper trading little changed at $6 641 a tonne, a tad above a four-year low of $6 376.25 hit last week.
