Global shares dropped on Monday after Russian missiles pounded cities across Ukraine and as renewed concern about the economic outlook sent investors into safe-haven assets such as the dollar and bonds.

Any belief that the U.S. Federal Reserve (Fed) will shift to a softer stance toward monetary policy was extinguished on Friday by data that showed U.S. unemployment fell in September, pointing to a persistently tight labor market.

The dollar held steady against a basket of currencies, while a number of market-based measures of investor risk nervousness showed another increase.

Russian missile strikes during Monday's rush hour across Ukraine killed at least five people in the capital Kyiv, in apparent revenge bombings after President Vladimir Putin declared an explosion on the bridge to Crimea to be a "terrorist attack."

"I had wondered if markets were looking at the situation in Ukraine and thinking this was moving us toward an end – which was what the first reaction was to the progress that the Ukrainian army had made in the summer. That reaction is no longer happening and this is clearly seen as just an increase in tension, rather than the end of anything," Societe Generale head of currency strategy Kit Juckes said.

"We’ve got geopolitical tensions and we’re still on track towards tighter monetary policy in the States and the concern is still by the time they finished tightening, will they have tightened too much and left the economy looking pretty vulnerable?" he added.

The MSCI All-World was last 0.4% lower, down for the fourth day in a row. The pan-European STOXX 600 fell 0.2%, having skimmed one-week lows, while Germany's DAX lost 0.1% and the FTSE 100 fell 0.4%, making it one of the weaker performing indices.

S&P 500 futures fell 0.3%, while those on the Nasdaq lost 0.4%.

Wall Street sank on Friday after an upbeat payrolls report cemented expectations for another large rate hike.

Futures imply a more than 80% chance of rates rising by 75 basis points next month, while the European Central Bank (ECB) is expected to match that and the Bank of England (BoE) to hike by at least 100 basis points.

Core measure

U.S. consumer inflation is expected to have moderated to an annual 8.1%, but the core measure is forecast to have accelerated to 6.5% from 6.3%. The U.S. consumer price index (CPI) data is due on Thursday.

"We are in the midst of the largest and most synchronized tightening of global monetary policy in more than three decades," said Bruce Kasman head of economic research at JPMorgan, who expects hikes of 75 basis points from all three of the central banks.

"The September CPI report should show a moderation in goods prices that is a likely harbinger of a broader slowing in core inflation," he said. "But the Fed will not be responsive to a whisper of inflation moderation as long as labor markets shout tightness."

Minutes of the Fed's last policy meeting are also out this week and are likely to sound hawkish given how many policymakers lifted their dot plot forecasts for rates.

Although U.S. inflation and the Fed's response to it remain front and center of investors' minds, eurozone government bonds got a boost from the pickup in investor risk aversion.

German 10-year Bund yields, which serve as the region's benchmark, eased 3 basis points to 2.195%, while the more sensitive 2-year Schatz fell 7 bps to 1.795%.

Adding another note of caution was a 2% drop in Chinese blue-chip stocks, following a survey that showed the first contraction in services activity in four months.

Corporate earnings also kick off on Friday, with JP Morgan, Citi, Wells Fargo and Morgan Stanley reporting results.

The dollar index rose 0.2% to 113.06, leaving the euro down 0.3% at $0.9707 and the yen flat at 145.465, a whisker away from the recent 24-year high of 145.90 that prompted Japanese intervention.

Sterling fell 0.2% to $1.1066 after the Bank of England announced a surprise decision to shore up the gilt market ahead of the end of an emergency bond-buying program on Friday and the government brought forward the publication of independent budget forecasts.

Oil fell for the first time in a week, as investors took profit on last week's 11% rally after a deal on supply reductions by OPEC+.

Brent fell 0.7% to $97.26 a barrel, while U.S. crude dropped 0.6% to $92.08 a barrel.