European Factors to Watch-Shares to rebound as Putin recalls troops after exercise

Tue Mar 4, 2014 2:52am EST

By Francesco Canepa

LONDON, March 4 (Reuters) - European stocks were seen rebounding on Tuesday with investors taking heart from Russia's decision to call back troops engaged in exercises in an area which borders crisis-struck Ukraine.

At 0749 GMT, futures for the Euro STOXX 50, Britain's FTSE 100 , Germany's DAX and France's CAC were between 0.8 percent and 1.2 percent higher.

The euro hit a session high against the dollar and Asian shares outside Japan edged into positive territory after Russian President Vladimir Putin ordered troops that took part in military exercises in central and western Russia to return to base.

Moscow had denied that the exercises, which began last week, had anything to do with events in Ukraine, where Putin has said he has the right to deploy troops to protect Russian compatriots.

"There's a perception that maybe we're going see a ratcheting down of tensions and there's a possibility that President Putin may be open to dialogue and that's why markets are bouncing," Michael Hewson, chief market analyst at CMC Markets UK, said.

"I would be sitting on the sidelines still because it's a very fluid situation. We're going to continue to see a certain amount of volatility and it would be a brave investor who dives back in now."

Traders said sentiment was also supported by speculation the European Central Bank may loosen lending conditions at a meeting on Thursday, after the bank's President Mario Draghi said late on Monday that inflation in the euro zone was "way below" the ECB's goal.

Europe bourses in 2014:

Asset performance in 2014:------------------------------------------------------------------------------ > Asian shares under pressure as Ukraine tensions persist > Wall St sells off as Ukraine-Russia tension rises > Nikkei rebounds on bargain hunting; Ukraine concerns still weigh > TREASURIES-Ukraine conflict sends yields to 4-week low > FOREX -Yen slips, takes breather after rising on Ukraine jitters > PRECIOUS-Gold holds near 4-month high on Ukraine crisis > London copper near 3-month low; more losses eyed on Russia > Brent holds above $111 as tensions over Ukraine crisis rise

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