By Geoffrey Smith
Investing.com -- European stock markets opened higher on Tuesday on further signs of progress in peace talks between Ukraine and Russia, which also brought much-needed relief to global oil markets.
The mood has also been lifted by a sharp reversal in Chinese stock markets, which rocketed after verbal intervention from the central bank and government promising to keep the stock market stable and support the economy.
By 4:20 AM EDT (0820 GMT), the Euro Stoxx 50 was up 100 points, or 2.7%, while the broader Stoxx 600 was up 2.1%. The biggest gainer among major markets was the French CAC 40 with a 2.6% rise while the FTSE 100 underperformed with a gain of only 1.6%.
Ukraine's President Volodymyr Zelensky had said on Tuesday that Russia had started to show a "more constructive" attitude in talks, and repeated his view that NATO membership - a key Russian bugbear - was out of reach for Ukraine.
Late on Tuesday, Ukrainian Presidential aide Mikhaylo Podolyak claimed that Ukrainian forces had started a counteroffensive in several regions. Unverified video footage on Wednesday claimed to show 15 Russian helicopters destroyed or damaged at an airbase outside Kherson.
Away from the battlefield, the day is likely to be dominated by the U.S. Federal Reserve's policy meeting and Chairman Jerome Powell's subsequent press conference. A first rate rise in nearly four years is considered all but certain, leaving Powell's guidance as the key variable. U.S. retail sales data for February are likely to dominate early trading ahead of the Fed.
Elsewhere, investors will be nervously looking at the Russian bond market on a day when it has some big dollar and euro interest payments due. In response to Western sanctions, the Kremlin has enacted legislation to allow it to service foreign debt in rubles, something that will probably be viewed as a default by ratings agencies and bondholders. The ruble nonetheless strengthened nearly 2% in a nod to the ongoing peace talks.
Technology stocks stood out in early trading, following their Chinese counterparts higher. All eyes were on Prosus (AS:PRX), the Dutch-listed vehicle that holds Naspers' stake in Internet giant Tencent. The start of trading in the stock was delayed due to problems establishing a price.
BMW (DE:BMWG) stock rose 1.6%, the positive backdrop outweighing a profit warning from the carmaker due to the Ukrainian war. Like Volkswagen (DE:VOWG_p), BMW is having production problems due to its reliance on wire harnesses that are made in Ukraine.
In the U.K., spread betting specialist IG Group (LON:IGG) stock fell 3.3% after its fiscal third-quarter numbers suffered from a comparison with last year's meme stock craze.
In foreign exchange markets, the euro was up 0.4% against the dollar at $1.0994, while sterling was up 0.1% at $1.3056. The dollar index was down 0.4% at 98.665.
Crude oil prices bounced after their sharp losses on Tuesday which were validated by a 3.75 million barrel increase in U.S. crude stocks. Brent futures were back above $100 with a 3% rise to $103.03 a barrel, while U.S. crude was up 2.4% at $98.73 a barrel.