European stocks cut almost all session losses today as Russia and Ukraine held ceasefire talks, while euro zone banks slumped as they braced for impacts from tough new sanctions on Russia.

The pan-European STOXX 600 ended 0.1% lower after having fallen nearly 2% in the session, as investors bought defensive and technology names.

On the month, the index lost 3.4%, and is off about 9% from its record high hit in January.

Dublin's ISEQ index was up 56 points (0.73%) to close at 7,860.

London's FTSE was down 31 points (0.42%) to 7,458, while the CAC in Paris was down 93 points (1.39%) to 6,658 and the DAX in Frankfurt was 106 points ((0.73%) lower to close at 14,461.

Officials from Russia and Ukraine ended peace talks today and will return to their respective capitals for further consultations before a second round of negotiations, RIA news agency reported.

Markets were roiled after Moscow put its nuclear deterrent on high alert in the face of a barrage of Western reprisals, over its invasion of Ukraine, that included blocking big Russian banks from the SWIFT global payments system.

"The lack of any obvious progress in the Russia-Ukraine ceasefire talks has not provoked any further selling," said Chris Beauchamp, chief market analyst at online trading platform IG.

"It looks like a major escalation in the conflict would be required to prompt a further leg down."

Euro zone banks slumped 5.7% with lenders most exposed to Russia, including Austria's Raiffeisen Bank, UniCredit and Societe Generale, plunging between 9.5% and 14%.

"The fall in markets that we have seen already has wiped out the profits, particularly if you look at the French banks with Russian exposure, they fell this morning by more than the turnover that they have in Russia as a percentage of the company turnover," said Jonathan Bell, chief investment officer at Stanhope Capital.

Euro zone money markets further scaled back expectations for rate hikes from the European Central Bank, with traders now pricing in a total of 30 basis points (bps) by year-end, from roughly 35 bps late last week.

Goldman Sachs forecast European headline inflation to rise sharply to 5% in 2022 and said the crisis could shave off as much as 0.4% of euro area GDP this year.

London-listed energy major BP slid 4.0% after the biggest foreign investor in Russia said it was abandoning its stake in state oil company Rosneft at a cost of up to $25 billion.

France's Renault, which controls Russian carmaker Avtovaz, skid 6.6%

Defence company Rheinmetall soared 24.8% after German Chancellor Olaf Scholz said the country would sharply increase its spending on defence to more than 2% of its economic output.

French defence group Thales, Italy's Leonardo and UK's BAE Systems gained between 10.2% and 15%.

Renewable energy companies such as Vestas Wind and Orsted jumped more than 10% on growing bets of a shift away from Russian gas supplies.