LONDON- Caution prevailed in global financial markets on Monday amid talk of more sanctions being imposed on Russia over its actions of Ukraine, while a closely watched part of the U.S. yield curve continued to fuel recession worries.

Germany said the West would agree to impose more sanctions on Moscow in the coming days after Ukraine accused Russian forces of war crimes following civilian deaths near Kyiv.

More sanctions would ratchet up the already huge economic pressure on Russia over its invasion of Ukraine.

"I think that's the key driver over the near term, what happens with the sanctions if they peak here or not," said Mark Haefele, chief investment officer at UBS Global Wealth Management.

The pan-European STOXX 600, S&P 500 and Nasdaq stock futures gradually ticked up from European morning trading and were up 0.5%, 0.1% and 0.4% by 1113 GMT.

While volatility remained low, news that Tesla Chief Executive Officer Elon Musk has built a 9.2% stake in Twitter took the spotlight and sent shares in the micro-blogging site surging 26% in U.S. premarket trading.

Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan inched up 1.1% while markets in mainland China were closed for a holiday.

The euro eased 0.4% to $1.1001 while analysts fear the currency could fall further should the European Union ramp up its sanctions to target energy imports from Russia.

Investor morale in the euro zone fell to its lowest level in nearly two years in April, a survey showed on Monday, suggesting the beginning of a recession in the second quarter of 2022.

Euro zone government bond yields retreated after monetary tightening expectations last week drove German borrowing costs to their highest since February 2018.

Meanwhile in U.S fixed income markets, the yield curve between two- and 10-year U.S. notes, in a move widely seen as signalling a coming economic contraction, inverted as a strong jobs report for March last week supported the view that the Federal Reserve would hike rates aggressively to tame soaring inflation.

Several Fed officials are due to speak at public events this week, with the prospect of sending more hawkish signals, and minutes of the last policy meeting are due on Wednesday.

Two-year yields were at 2.44%, close to their highest since March 2019, while benchmark 10-year yields stood at 2.40%.

The dollar index was up 0.25% to 98.85, having recently bounced around between 97.681 and 99.377.

The recent jump in U.S. bond yields has backed the U.S. dollar, particularly against the yen, given the Bank of Japan acted repeatedly last week to keep its bond yields near zero.

The dollar was trading firm at 122.77 yen and not far from its recent seven-year peak of 125.10.

Oil slipped in volatile trading as the release of strategic reserves by big consumer nations eased concerns over tight supply due to the Ukraine conflict and the lack of an Iranian nuclear deal.

(Reporting by Julien Ponthus; Editing by Kenneth Maxwell, Susan Fenton and Hugh Lawson)