* Russian shares surge, Europe rises on truce talk
* Rouble rises against dollar, euro strengthens
* Wall Street set to open higher
* ECB expectations temper German bond yield rise
By John Geddie
LONDON, Sept 3 World markets jumped on Wednesday
as Ukraine's President Petro Poroshenko said a ceasefire had
been reached with Russia, raising hopes that a recent escalation
in the conflict could be reversed.
The news sent Russian shares soaring towards their biggest
daily gains in four months, while the rouble jumped 1.5 percent
against the dollar, despite some differing reports of the extent
of the truce talks from the Kremlin.
Poroshenko's press office said Ukraine's president reached
agreement with his Russian counterpart Vladimir Putin on
Wednesday on a "permanent ceasefire" in eastern Ukraine's
The Kremlin later said steps towards peace had been
discussed but there was no formal ceasefire because Russia is
not a party to the conflict between Kiev and pro-Russian rebels
in Ukraine's eastern Donbass region.
Dollar-traded Russian stocks rose over four percent, while
the pan-European FTSEurofirst 300 was up 0.9 percent at
1,388.11 points. While the rouble was the main mover, the euro
was also higher on the day against almost every other major
"With Russia, things are never black and white. There are
some questions in the background about how solid this ceasefire
actually is. But if this ceasefire can hold and is confirmed,
then we could see a nice move higher," said Dafydd Davies,
partner at Charles Hanover Investments.
Wall Street futures also rose 0.5 percent, pointing
to a solid start for U.S. markets, while MSCI's broadest index
of Asia-Pacific shares outside Japan, already
buoyant after strong Chinese services data extended gains, added
German 10-year bond yields - the euro zone benchmark -
pulled off a day's high of 0.969 percent but were still up 3
basis points on the day.
Many analysts still remain sceptical about any near-term
resolution to the Ukraine conflict which has killed more than
2,600 people since April and provoked the worst crisis in
relations between Russia and the West since the Cold War.
U.S. President Barack Obama said any ceasefire could only be
effective if Russia stopped "pretending" it was not active in
the conflict and stopped sending troops and weapons into the
"The key point in all this is that we've got some fairly
untrustworthy protagonists in this whole affair. And even if we
do get an agreement the market is going to be pretty sceptical
as to quite how binding it's going to be, how long it might
hold, and indeed whether we'll be back to square one in next to
no time," Chris Scicluna, head of economic research at Daiwa
Securities told Reuters TV.
To watch the full interview click here reut.rs/1nVFKZW
Surveys on Wednesday showed how European economies were
being hurt by the tensions. Euro zone business grew at the
slowest rate this year, while retail sales volumes fell for the
first time in 2014.
This weakness adds to the growing pressure on the European
Central Bank ahead of its meeting on Thursday, with investors
expecting hints of further easing that will buoy markets.
"We're expecting a strong verbal commitment from Draghi on
Thursday," said Romain Boscher, global head of equities
management at Amundi, which has 821 billion euros ($1.1
trillion) under management.
"The ECB still has plenty of ammunition left, and it will
certainly use it when needed."
Earlier in Asia, Japan's Nikkei stock average ended
up 0.4 percent near a 7-month high, bolstered by hopes that
Prime Minister Shinzo Abe's cabinet reshuffle will give fresh
momentum to his growth-oriented policies.
Spot gold steadied at $1,274.30 an ounce, while Brent
crude oil futures rebounded around 1 percent to $101.28
a barrel after they fell to their lowest level in 16 months on
(Additional reporting by Hideyuki Sano in Tokyo)