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(Alliance News) - A de-escalation of tensions on the Russia-Ukraine border lifted European equity prices on Tuesday, though with the benchmarks in Frankfurt and Paris outperforming London's FTSE 100.
Russia has begun withdrawing troops deployed in the south and west of the country, near Ukraine's border, back to their permanent bases, the Defence Ministry said, without giving an exact number.
"As combat training measures are coming to a close, the troops, as is always the case, will conduct combined marches to their permanent garrisons," Defence Ministry spokesperson Igor Konashenkov said.
"Units of the Southern and Western Military Districts that have accomplished their tasks have already begun loading personnel and equipment on railway and auto transport means and will today begin heading to their military garrisons," he said in a statement quoted by the TASS news agency.
The FTSE 100 index was up 54.22 points, or 0.7%, at 7,585.81. In mainland Europe, both the CAC 40 in Paris and DAX 40 in Frankfurt surged 1.7%.
London's large-cap measure was held back by price declines for miners and for oil producer Shell, as both gold and oil prices slipped back.
The mid-cap FTSE 250 index was up 230.04 points, or 1.1%, at 21,847.93. The AIM All-Share index was up 9.01 points, or 0.9%, at 1,073.78.
The Cboe UK 100 index was up 0.7% at 753.01. The Cboe 250 was up 1.0% at 19,541.31, and the Cboe Small Companies up 0.2% at 15,468.39.
Troop deployments by Russia have caused tensions between the West and Russia to soar to levels not seen since the Cold War, sapping the investment mood at the start of the week. Moscow said its soldiers were only taking part in legal military exercises.
While nervy equity markets suffered from sell-offs on Monday, trading so far on Tuesday has seen a shift away from safe havens.
"Investors welcomed reassuring signs of de-escalation in geopolitical tensions with Russia/Ukraine, leading to a new 'risk-on' trading stance," ActivTrades analyst Pierre Veyret commented.
"While a lot remains to be done on the diplomatic front, most investors acknowledged ongoing talks were on a positive path, which led them to buy the dips on equity markets. Solid rebounds are being registered on riskier assets, while declines can be spotted in most safer havens, confirming portfolio rotation."
Gold miner Fresnillo, a beneficiary from Monday's cautious mood, was 3.1% lower midday Tuesday.
Gold prices suffered from shift away to safe havens assets. Gold stood at USD1,852.81 an ounce midday Tuesday, down from USD1,865.30 at the London equities close on Monday.
The precious metal had spiked to USD1,879.44 earlier on Tuesday, its best level since June.
Anglo American and Rio Tinto lost 3.1% and 1.7%, though fellow miner Glencore bucked the trend, rising 2.3%. Glencore posted strong annual results and outlined plans for USD4.0 billion in shareholder returns.
Shell lost 1.3% as oil prices weakened. BP was up 0.2%, however.
Brent oil was quoted at USD93.25 a barrel midday Tuesday, down from USD94.70 a barrel late Monday. The North Sea benchmark hit USD96.74 a barrel on Monday, its best level since late-September 2014.
"With the suggestion this morning that tensions could be starting to de-escalate, the market is cooling off slightly with the potential for a move back down towards USD90 if tensions continue to ease further," Interactive Investor analyst Victoria Scholar commented.
Russia's troop pullback lifted the pound, euro and ruble.
Sterling was quoted at USD1.3541 midday Tuesday, firm on USD1.3520 late Monday. The euro stood at USD1.1344, up from USD1.1300. Against the safe-haven yen, the greenback rose to JPY115.68 from JPY115.58.
Against the ruble, meanwhile, the dollar fell to RUB75.41 midday Tuesday London time, from RUB77.03 at the same time on Monday.
Equity market futures in New York were sharply higher. The Dow Jones Industrial Average was seen opening up 1.1%, the S&P 500 up 1.5% and the Nasdaq Composite up 2.0%.
Focus remained on central bankers. St Louis Fed President James Bullard said Monday the Federal Reserve needs to accelerate the pace of interest rate increases to fight rising inflation, but can do so in a way that doesn't roil financial markets.
Bullard, a voting member of the Fed's policy-setting committee, caused a sharp reaction by markets last week with similar comments on the need to remove stimulus from the economy provided during the Covid-19 pandemic.
Analysts at Danske Bank noted that as the Fed's next meeting in March draws near, committee members are split on the pace of monetary policy tightening.
"Yesterday, James Bullard repeated his hawkish message from last week," Danske analysts said. "In contrast, San Francisco Fed President [Mary Daly] on Sunday said it is paramount for the central bank to be measured and data-dependent."
Back in London, Plus500 shares fell 7.6%. The Haifa, Israel-based provider of online trading platforms registered pretax profit of USD386.4 million for 2021, down 26% from USD523.3 million in 2020, on revenue that fell by 18% to USD718.7 million from USD872.5 million.
The company blamed its earnings decline on falling customer income. This fell by 30% to USD702.8 million in 2021 from USD997.5 million the year before.
Nonetheless, Plus500 affirmed that customer income, a key measure of its underlying performance, was "consistently strong" throughout 2021.
Plus500 said it has launched a new share buyback programme for 2022. The company plans to purchase an additional amount of shares for up to USD55.0 million.
Edison analyst Richard Sloss commented: "The meteoric rise in online trading which began during the early days of the pandemic is showing signs of slowing down."
By Eric Cunha; ericcunha@alliancenews.com
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