Berliner Boersenzeitung - Stock markets dip as Ukraine worries return

Asian stock markets mirrored strong rebounds on Wall Street and across Europe seen Tuesday on hopes Russia would not invade Ukraine after Moscow said some of its troops on the countries' border were pulling back.

But NATO warned Russia is continuing to mass forces for a possible invasion while the Russian parliament called on President Vladimir Putin to recognise Ukraine's two separatist republics as independent.

"The latest developments have created some hesitation in the futures market," Briefing.com analyst Patrick O'Hare said in a note before Wall Street opened for trading.

"But what's notable about that is that the concern about the latest developments pales in comparison to the relief the market expressed yesterday at the idea of a troop pullback," he added.

Stock markets have swung sharply this week on developments in the Ukraine crisis.

"We're basically drifting from one crisis to another at the minute; from soaring inflation and higher interest rates to deteriorating living standards and now the prospect of conflict in Ukraine, which in turn exacerbates the first two," said OANDA analyst Craig Erlam.

"With tensions easing on the border, attention has quickly shifted back to inflation following some more disappointing figures this morning," he added.

UK annual inflation has hit the highest level since 1992, official data showed Wednesday, adding pressure to the cost of living and on the Bank of England to keep raising rates.

Global inflation has reached heights not seen in decades, largely owing to a surge in energy prices as economies reopen from pandemic lockdowns.

- Stubborn inflation -

World oil prices this week struck the highest levels since 2014, as investors grow increasingly worried about energy supplies in the event of a war between major producer Russia and Ukraine.

Crude futures were back on the rise again Wednesday after tumbling Tuesday on easing conflict fears.

Observers have warned that oil could soon break above $100 per barrel.

"Volatility and uncertainty is just going to be heightened. That can be due to Russia-Ukraine, it could be due to stubborn inflation," Brenda O'Connor Juanas at UBS told Bloomberg Television.

US producer prices rose twice as much as expected in January, firming expectations that the Federal Reserve will from next month begin a series of US interest rate hikes.

Investors are awaiting the release later Wednesday of minutes from the Fed's January policy meeting, hoping it will provide clues about the pace and timing of rate hikes.

While the European Central Bank is sitting tight for now, it should start thinking about gradually withdrawing economic stimulus measures, as the risk of acting "too late" against soaring inflation grows, an ECB policymaker has told the Financial Times.

The comments late Tuesday by Isabel Schnabel, a member of the ECB's executive board, come as the eurozone experiences record-high annual inflation at 5.1 percent.

- Key figures around 1430 GMT -

London - FTSE 100: DOWN 0.5 percent at 7,570.31 points

Frankfurt - DAX: DOWN 0.4 percent at 15,352.91

Paris - CAC 40: DOWN 0.6 percent at 6,938.48

EURO STOXX 50: DOWN 0.5 percent at 4,123.86

New York - Dow: DOWN 0.3 percent at 34,899.93

Tokyo - Nikkei 225: UP 2.2 percent at 27,460.40 (close)

Hong Kong - Hang Seng Index: UP 1.3 percent at 24,675.63 (close)

Shanghai - Composite: UP 0.6 percent at 3,456.83 (close)

Brent North Sea crude: UP 1.8 percent at $94.94 per barrel

West Texas Intermediate: UP 1.5 percent at $93.48 per barrel

Euro/dollar: DOWN at $1.1354 from $1.1361 late Tuesday

Pound/dollar: UP at $1.3556 from $1.3541

Euro/pound: DOWN at 83.78 pence from 83.88 pence

Dollar/yen: DOWN at 115.55 yen from 115.62 yen

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(A.Lehmann--BBZ)