The Russian President called Turkey’s actions a "stab in the back" and accused the country of being an "accomplice of terrorists".
Putin, whose country has close economic ties with Turkey, warned yesterday's "tragic event will have serious consequences for Russian-Turkish relations”.
The Turkish lira fell sharply against the dollar throughout the day, with the greenback up 1 per cent at 2.877 lira at time of print.
Equity markets recovered ground they’d lost on the immediate reaction to the news early yesterday morning, with the FTSE 100 blue chip index closing down 28 points.
Across Europe and the US, travel company stocks fell while energy shares soared and the oil price hit seven day highs over supply concerns.
Investors initially fled to safe havens such as gold but pulled back as NATO secretary general Jens Stoltenberg called for calm. Mike Van Dulken, head of research at Accendo Markets told City A.M.: “The shock was the aggressive wording by Putin.”
“Gold came back down from its rally early in the day, and markets finished well off their lows. Markets have a lot on their plates at the moment,” he added.
In the US, investors piled into government bonds, causing the 10-year bond yield to fall to a three-week low of 2.21 per cent. The German bund two-year yield slipped below 0.4 per cent for the first time.
The gold price spiked initially on the news but didn’t maintain its gains early in the day.
Head of commodities at Saxo Bank Ole Hanson told City A.M.: “Gold was only marginally higher with traders still preoccupied by the negative impact of a December rate hike from the Fed.”
Market sentiment remained uncertain with the focus on the long term outlook. Russ Mould, investment director at AJ Bell said: “The FTSE had quite a sanguine response, but the long term implications could however be enormous.”
Hanson added the rise in oil price of around 3 per cent throughout the day was down to a variety of factors.
“Oil moved higher on a combination of heightened geopolitical risks in Syria and buying from hedge funds who had increased short futures positions in recent weeks,” he said.