European shares rebound as Ukraine tensions ease

European shares this morningrebounded from sharp losses in the previous session, with banks and miner Glencore Xstrata among the top performers.

Global equities yesterday fell sharply from multi-year highs following a move by Russian troops to seize control of Ukraine’s Crimea region.

However, stock markets recovered this morning after Russian president Vladimir Putin ordered troops involved in a military exercise in western Russia back to base in an announcement that appeared intended to ease East-West tension over fears of war in Ukraine.

The pan-European FTSEurofirst 300 index, which fell 2.2 per cent yesterday, bounced back to stand 1.2 per cent higher at 1,334.54 points in early session trading.

The euro zone’s blue-chip Euro STOXX 50 index, whose 3 per cent fall yesterday marked its worst decline since June 20 last year, also rebounded by 1.3 per cent to 3,094.70 points.

"I would look to buy the market on the dip but I wouldn't bet on too much upside in the near-term," said Hendrik Klein, who heads Swiss high-frequency trading and asset management firm Da Vinci .

Eric Bendahan, who manages European equity strategies at Swiss bank SYZ, expected an eventual resolution to the dispute between Ukraine and Russia.

“The market drop yesterday looked exaggerated,” he said.

Glencore Xstrata rose 2.4 per cent to give one of the biggest lifts to the FTSEurofirst 300 index after it posted core profits above market forecasts.

Banks also recovered from a sharp fall , caused by worries over the exposure of some lenders to Ukraine and Russia, with the STOXX Europe 600 Banking Index rising by 1.4 per cent.

The banking sector and European equities in general were further buoyed by speculation that the European Central Bank may loosen lending conditions on Thursday, after ECB President Mario Draghi said that inflation in the euro zone was "way below" the ECB's goal.

Reuters