Ukraine says its bigger neighbour has launched a full-scale invasion by targeting cities with weapons strikes, and that Russian troops had landed in the Ukrainian port cities of Odessa and Mariupol.
The benchmark S&P/ASX200 index closed 215.1 points, or 2.99 per cent lower, at 6990.6 points on Thursday.
That meant investors lost about $68 billion in market value during the volatile session, with the index falling as much as 3.4 per cent at one stage.
The All Ordinaries index slid 220.8 points, or 2.95 per cent, to 7253.1 points.
"We saw a market sell-off quite quickly in response to the Russian military activity. It was a broad moves risk-off event that saw money move out of stocks into safe havens such as the US dollar, and bond futures," CommSec market analyst Tom Piotrowski said.
Every single sectoral index in the local market ended deep in the red, but the bulk of the losses were sustained by technology, mining and consumer discretionary shares.
Heavyweight mining shares suffered losses over concerns about demand for iron ore in China. BHP shares were the worst performers of the lot, sliding more than 6.5 per cent, as the stock turning ex-dividend also affected sentiment.
Rival Rio Tinto ended 3.8 per cent lower at $115.35 after flagging rising costs at its full-year results late on Wednesday.
The world's biggest iron ore producer reported its best ever annual profit and dividend but warned its Pilbara iron ore costs would increase due to labour shortages in Western Australia.
Fortescue Metals also lost more than 4 per cent.
Energy stocks fell sharply but recovered some ground late in the session as oil prices breached $US100 a barrel for the first time since 2014 on potential supply concerns.
Woodside closed 2.7 per cent down to $28.08, while Santos was down 0.4 per cent at $7.10.
"We're going to see elevated energy prices for some time to come and that's going to feed through to inflationary pressures. That's a challenging set of circumstances for the equities market," Mr Piotrowski said.
Technology shares, which have already corrected on prospects of rising interest rates, slipped further amid the geopolitical turmoil. The sector index hit its lowest level since June 2020, led by a 13 per cent slide in payments firm Block, a 7.5 per cent loss in Wisetech Global and and a 5.5 per cent drop in Xero.
Qantas shares fell more than five per cent to $5.08 after Australia's national carrier widened its half-year loss and forecast a $650 million hit to second-half earnings due to Omicron.
The Big Four banks closed between 2 per cent and 3.5 per cent lower.
Heavy losses in travel stocks such as Flight Centre and Webjet as well as Domino's Pizza contributed to the decline in consumer discretionary sector.
Bucking the trend, CIMIC Group shares jumped nearly 33.4 per cent to $22 after it received a $1.47 billion offer from top shareholder Hochtief to buy out the remaining 21.4 stake in the Australian construction firm.
The Australian dollar slid amid souring risk sentiment following the Russian decision. The local currency was buying 71.95 US cents at 1700 AEDT, compared to 72.33 US cents at Wednesday's close.
ON THE ASX
* The benchmark S&P/ASX200 index closed 215.1 points, or 2.99 per cent lower, at 6990.6 points on Thursday.
* The All Ordinaries index slid 220.8 points, or 2.95 per cent, to 7253.1 points.
* At 1700 AEDT, the SPI200 futures index was unchanged at 6944 points.
CURRENCY SNAPSHOT
One Australian dollar buys:
* 71.95 US cents, from 72.33 cents on Wednesday
* 82.46 Japanese yen, from 83.20 yen
* 63.99 Euro cents, from 63.84 cents
* 53.30 British pence, from 53.20 pence
* 106.93 NZ cents, from 106.89 cents.
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