Europe open: Shares edge ahead with all eyes on Ukraine, inflation

European shares edged ahead at the open on Wednesday as investors cautiously welcomed a partial withdrawal of Russian troops from the border with Ukraine and digested inflation data from the UK and China.

The pan-regional Stoxx 600 index was up by 0.45% in early deals. An announcement from Moscow that it was pulling back some troops helped US and Asian equities overnight, although Wall Street futures were all lower in a sign that investors are still wary of geopolitical tensions.

In economic news, British consumer prices rose at the fastest annual pace in nearly 30 years in January to hit an annual rate of 5.5%, as households face a continuing squeeze with wages failing to keep pace.

Chinese inflation eased in January as food prices fell and factory gate inflation slowed, official figures showed. Consumer inflation slowed to an annual rate of 0.9% from 1.5% a month earlier and was lower than the 1% average economists' estimate. Producer price inflation eased to 9.1% from 10.3%, undershooting expectations for a 9.5% reading.

That news came a day after Tuesday's US data showed core factory gate inflation, which is the cost for producers after stripping out food and energy, posted its biggest gain in a year.

Eyes will now turn to minutes from the US Federal Reserve's last meeting, due to be released later on Wednesday, for signs of whether policymakers will be keen on a larger half-point rate rise at their March meeting.

In equity news, Swedish Match shares were up 5% after the tobacco company lifted its annual dividend, while French lottery operator La Francaise des Jeux gained almost 7% as it raised 2025 targets after better-than-expected annual results.

French industrial gases company Air Liquide was up 3% as it raised annual profits guidance.

On the downside, shares in Ericsson slumped 7% after the telecoms giant said an internal investigation in 2019 found serious breaches of its compliance rules in Iraq.

Swedish IVF company Vitrolife fell more than 9% after reporting a fall in fourth-quarter net income.