Europe open: Shares up as traders pin hopes on diplomacy in Ukraine standoff
European shares opened higher on Tuesday as investors hoped diplomatic moves would help avert a Russian invasion of Ukraine.
The pan-European index bounced back from Monday's sharp sell-off to gain 0.7% in early deals. Investors were eyeing Tuesday's meeting between German Chancellor Olaf Scholz and Russian President Vladimir Putin after the latter appeared to be in favour of talks continuing with Western leaders keen to stop a war.
US stocks slipped again overnight as traders took a more pessimistic view on diplomacy, while hawkish St Louis Fed governor James Bullard called for a faster timeline on monetary tightening.
In economic news, Japan's fourth-quarter GDP expanded at an annualised 5.4% while British unemployment stayed at 4.1% in late-2021. However UK workers' earnings fell by 0.8% when adjusted for inflation.
"Mixed reports on the escalating tensions between Russia and concerned nations have suggested that on the one hand, the threat of an invasion is nearing, yet hopes for a diplomatic solution are not yet exhausted," said Interactive Investor head of markets Richard Hunter.
"Amid such uncertainty, there has been something of a flight to haven investments such as gold and the US dollar, while the possibility of a further supply shock leaves the oil price currently ahead by 23% in the year to date."
"Meanwhile, comments from a Federal Reserve member suggested that the central bank’s credibility was “on the line” in fighting inflation, adding to the increasingly loud chorus that the Fed is currently considering a more aggressive approach which would begin with an interest rate hike of 0.5% in March."
On the equities front, shares in miner and commodities trader Glencore rose as it said it would pay $4bn (£3bn) to shareholders after reporting an 84% increase in underlying earnings boosted by soaring prices.
Randstad shares rose 3.6% after the recruitment firm topped market forecasts for fourth-quarter earnings, helped by some big multinational clients going on a hiring spree.
French IT consultancy Capgemini rose despite warning that its operating margin this year will likely be held back by inflationary pressures on salary and the cost of returning to offices.