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The FTSEurofirst 300 index of top European shares was up 0.4%, with MSCI’s world stock index up 0.6%.
Recent market anxiety over the standoff between Russia and Ukraine ebbed slightly after Polish Foreign Minister Radoslaw Sikorski said late on Tuesday that the possibility of Russia’s military invading eastern Ukraine has receded after Moscow agreed to send in humanitarian aid under Red Cross auspices.
Russian shares rose 0.4% on the reports that the aid convoy would cross the border under Red Cross supervision.
“The market is rangebound for now, with the focus on the tense situation in Ukraine, as well as on GDP figures for Germany and France due tomorrow,” IG France chief market analyst Alexandre Baradez said.
“There’s a lot of confusion about the Russian humanitarian convoy heading to Ukraine.”
Brent crude slipped below $103 a barrel to trade at its lowest level in more than a year as supply continued strong.
September Brent crude futures, which expire on Thursday, fell as low as $102.37, the weakest for a front-month since July 1, 2013. It was the fourth day of losses for the benchmark and comes after the International Energy Agency (IEA) pointed to well-supplied global markets and a glut in the Atlantic Basin.
Output from the Organization of the Petroleum Exporting Countries rose to a five-month high of 30.44 million barrels per day (bpd) in July as increased production from Saudi Arabia and Libya more than offset declines in Iraq, Iran and Nigeria.
“Brent prices have been in a steady decline and I think the background of that is that the market is forming the view that any supply disruptions are not on the immediate horizon,” CMC Markets chief market analyst Ric Spooner said.
But subpar global economic numbers were also a factor in generally weak commodity prices. Copper, seen as a barometer of world demand, fell to a six-week low of $6,926.50 per tonne on Wednesday.
Asian shares eked out modest gains, even though mainland Chinese shares were knocked off their highs by surprisingly weak loans data. Data also showed Japan’s economy shrank an annualised 6.8% from the previous quarter - the biggest contraction in three years - but the outcome was slightly better than market forecasts.
German government bond yields edged higher on Wednesday before an auction of 10-year German debt, but they remained near record lows amid jitters about the economic fallout in Germany and the rest of Europe from the Ukraine crisis.
German inflation for July was confirmed at 0.8% year-on-year, showing how weak inflationary pressures are even in the region’s strongest economy. Euro zone industrial output will be released later in the day and second-quarter gross domestic product reports from across the region are due on Thursday.
German 10-year yields rose 1 basis point to 1.07%, not far from last week’s record low of 1.02%. Yields usually rise before debt sales as traders make room in their books for the new paper, but analysts expected them to be pinned at record lows in the near term.
“The underlying sentiment remains weak. Until these geopolitical tensions start easing, investors will continue to look for the safety of top-rated assets,” RIA Capital Markets bond strategist Nick Stamenkovic said.
In currency markets, sterling edged up as investors trimmed bets against the currency before a Bank of England report, that may give clues on when Britain will start to tighten monetary policy.
The Bank of England’s Inflation Report, which will include updated economic forecasts, is likely to provide a fresh steer on the BoE’s intentions for rate hikes. The bank has said before that rate hikes will be data driven and gradual.
The pound edged up 0.1% against the dollar to $1.6825, pulling away from Tuesday’s two-month low of $1.6757.
Data on wages - a driver of inflation and an indicator of how much slack remains in the labour market - is due before the Inflation Report and could prove important.
