By Sruthi Shankar
(Reuters) -European stocks made cautious gains on Wednesday on hopes of a de-escalation of tensions between Russia and Ukraine, although accelerating inflation kept a lid on Britain’s blue-chip index.
The continent-wide STOXX 600 index rose 0.3%, adding to the 1.4% jump on Tuesday when Moscow indicated it was returning some troops surrounding Ukraine in an apparent de-escalation.
However, concerns lingered as Kyiv appeared to blame Russia for a cyber attack and Britain joined the United States in saying it had yet to be convinced the pullout was real.
Riskier assets have been hammered in the past weeks, with volatility gauges jumping to January highs on fears that Russia will invade Ukraine, while surging oil prices added to inflation fears.
“A lot of it (risks) seems to be in the price, but we would not make an investment decision based on a geopolitical event,” said Frederique Carrier, head of investment strategy at RBC Wealth Management. “Historically acts of war tend to have relatively short-lived impact on markets except if it is an oil crisis which itself triggers a recession.”
UK’s FTSE 100 lagged other main European indexes after data showed consumer prices rose at the fastest annual pace in nearly 30 years last month, boosting bets that the Bank of England will raise interest rates for a third consecutive time.
Miners and oil & gas drove gains in Europe, as most metal and oil prices made headway. [O/R] [MET/L]
Tobacco group Swedish Match gained 6.3% after proposing a hike to its annual dividend, while French industrial gas company Air Liquide climbed 2.9% on forecasting a bigger annual profit.
Swiss elevator maker Schindler fell 5.0% after warning that its China business will contract in 2022 due to construction delays, material cost inflation and supply chain disruptions.
Overall, European earnings have been largely positive, with analysts forecasting a 58.6% surge in fourth-quarter profit for companies on the STOXX, as per Refinitiv IBES estimates, revised marginally higher from the 56.2% forecast earlier this month.
Ericsson tumbled 9.1% after it said an internal investigation in 2019 found serious breaches of its compliance rules in Iraq.
Delivery Hero slumped 7.5% after Deutsche Bank downgraded the German online takeaway food company to “Hold”, citing limited visibility on refinancing of its debt and risk of a capital raise.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich)
