The Nikkei stock index plunged nearly 3 percent on Monday, ending at its lowest level in about 16 months, amid fears over higher fuel costs as the United States and its European partners are actively considering the banning of Russian oil imports in the wake of Moscow's onslaught in Ukraine.

The 225-issue Nikkei Stock Average ended down 764.06 points, or 2.94 percent, from Friday at 25,221.41, its lowest closing level since Nov. 10, 2020. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 50.91 points, or 2.76 percent, lower at 1,794.03.

A financial board in Tokyo shows the Nikkei stock index losing more than 900 points at one point on March 7, 2022. (Kyodo)

Crude oil futures jumped after U.S. Secretary of State Antony Blinken said in an interview with CNN on Sunday that Washington is talking with its European partners and allies to "look in a coordinated way" at the prospect of a ban on oil imports from Russia, a major producer.

On the Tokyo Commodity Exchange, Middle East crude oil futures briefly hit 78,820 yen per kiloliter, the highest level since late August in 2008.

Meanwhile, growing demand for the perceived safety of gold amid the ongoing conflict in Ukraine also lifted the price of the asset sold by Tokyo's Tanaka Kikinzoku Kogyo K.K., a major precious metal firm, to a record-high 8,109 yen per gram.

The euro briefly dropped to the lower 124 yen range, its lowest level since late November 2020, as investors sold the unit on fears over escalating tensions in the Ukraine conflict, dealers said.

At 5 p.m., the euro was quoted at $1.0870-0872 and 125.02-06 yen against $1.0928-0938 and 125.42-52 yen in New York and $1.1012-1014 and 127.14-18 yen in Tokyo at 5 p.m. Friday.

The dollar fetched 115.01-03 yen compared with 114.60-70 yen in New York and 115.45-46 yen in Tokyo late Friday afternoon.

The yield on the benchmark 10-year Japanese government bond fell 0.010 percentage point from Friday's close to 0.140 percent as investors bought the safe-haven debt on the intensifying crisis in Ukraine and a sharp fall in Tokyo stocks.

Tokyo stocks sank from the outset, with the Nikkei briefly nose-diving nearly 1,000 points, as investors unloaded a wide range of shares on concerns over Russia's invasion and its impact on the global economy.

The index dropped to just above the 25,000 psychological threshold in early trading.

Decliners were led by air transportation, transportation equipment and textile and apparel issues.

"As Russia is a major producer, a potential ban on its oil imports would have a significant impact on the economy. Along with a rise in other commodities, such as wheat, surging oil prices could lead to soaring inflation," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co.

Fujito said that companies could also see their profit margin shrink as it would be difficult to offset soaring costs through price raises.

The benchmark Nikkei index plunged over 5 percent since closing at 26,577.27 on Thursday, as market participants have turned risk-averse amid growing pessimism over the Ukraine crisis, brokers said.

Market participants are monitoring developments regarding the third round of talks between representatives of Ukraine and Russia, expected to take place later Monday, although hopes for a cease-fire remain low, brokers said.

On the First Section, declining issues outnumbered advancers 1,920 to 225, while 35 ended unchanged.

Rubber product issues plunged on worries that higher raw material costs would adversely impact the industry's revenues. Toyo Tire sank 132 yen, or 8.9 percent, to 1,352 yen, and Bridgestone fell 191 yen, or 4.3 percent, to 4,263 yen.

Large-cap technology shares dragged down the market, tracking losses on the U.S. Nasdaq index late last week, brokers said.

Semiconductor equipment maker Tokyo Electron fell 2,660 yen, or 4.9 percent, to 51,930 yen, while investment and technology conglomerate SoftBank Group shed 256 yen, or 5.2 percent, to 4,707 yen.

Trading volume on the main section rose to 1,750.53 million shares from Friday's 1,529.25 million shares.