Russia-Ukraine concerns linger; earnings in focus

LONDON — European markets inched lower on Wednesday as investors assessed the geopolitical outlook following Russia’s claimed partial withdrawal from the Ukrainian border, while corporate earnings season rumbles on.

The pan-European Stoxx 600 index hovered just below the flatline by mid-morning, with major bourses trading in negative territory.

Oil and gas stocks led gains, adding around 1%, while banking stocks shed 1.5%.

Energy prices in Europe could increase if Western countries impose sanctions on Russia, with U.S. President Joe Biden saying on Tuesday that a sanctions package would include reducing European consumption of Russian gas.

Meanwhile, British Prime Minister Boris Johnson said on Wednesday that the U.K. would target Russian banks and companies with sanctions if the country embarked on more aggressive activity toward Ukraine.

Russian Foreign Minster Sergey Lavrov said Moscow would retaliate if Britain did impose any sanctions.

Markets around the world rallied on Tuesday after Russia announced that it had begun returning some troops to deployment bases after training exercises near the Ukrainian border, assuaging fears of an imminent invasion and raising hopes of a de-escalation of recent tensions with the West.

However, Western officials and Ukrainian President Volodymyr Zelenskyy have urged caution in taking Russia’s claims at face value, and NATO on Wednesday accused Russia of increasing the number of troops at the Ukrainian border.

Shares in Asia-Pacific, which had closed by the time the news broke on Tuesday, joined their U.S. and European counterparts in rallying on Wednesday, with Japan’s Nikkei 225 leading gains.

U.S. stock futures were flat in early premarket trade on Wednesday after the major indexes snapped a three-day losing street in regular trading on the back of the news of Russia’s partial withdrawal.

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Earnings remain a key driver of individual share price action in Europe, with Heineken, Ahold Delhaize, Air Liquide, MTU Aero Engines and Alcon among the companies reporting before the bell on Wednesday.

Umicore shares gained 7.2% to lead the Stoxx 600 by mid-morning after the Belgian chemicals and metals recycling company posted an 81% jump in earnings for 2021 and optimistic guidance for 2022.

French lottery company FDJ climbed more than 6% after posting strong full-year earnings and upping its forward guidance.

At the bottom of the European blue chip index, Swedish IVF company Vitrolife fell more than 15% after reporting a fall in fourth-quarter net income.

Ericsson shares fell by almost 13% after the Swedish telecoms giant announced that an internal investigation had found serious compliance breaches at its business in Iraq.

On the data front, U.K. inflation came in at an annual 5.5% in January, slightly ahead of forecasts and remaining at a 30-year high.

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