The Stoxx Europe 600 index slipped 0.2% to 336.62, after jumping 2.1% on Tuesday. The move was the largest one-day percentage gain since early July, triggered by easing tensions between Russia and Ukraine after Russian troops reportedly were called back to their bases and President Vladimir Putin stressed he wouldn’t use military force .
Among major movers in Wednesday’s trade, shares of Subsea 7 SA dropped 5.8% after the offshore-engineering firm said earnings per share fell more than 40% in the fourth quarter.
Shares of Melrose Industries PLC dropped 5.6% after the investment company reported a rise in full-year adjusted pretax profit, but says it faces headwinds from the current strength of the pound.
On a more upbeat note, shares of Carrefour SA advanced 1.1% after the French supermarkets giant said operating profit grew 5.4% last year.
More broadly, investors waited for the U.K. services PMI and the second estimate of euro-zone GDP, with the former due at 9:30 a.m. in London, or 4:30 a.m. Eastern Time, and the latter at 10 a.m. In the afternoon, the U.S. ADP jobs report is likely to be watched for any clues on how strong February nonfarm payrolls have been ahead of the release on Friday.
Investors also watched out for developments in the Ukraine/Russia standoff, with Nato and Russia expected to discuss the latest developments at a special meeting on Wednesday. Nato said on Tuesday it continued to support a peaceful solution to the crisis, but that Russia is violating “Ukraine’s sovereignty and territorial integrity.”
Analysts at UBS said markets shouldn’t underestimate what’s at stake and that the “risk premia in financial assets certainly do not seem excessive.” The situation is a “bad advertisement” for emerging markets at a sensitive time, they said, and the consequence could be redemption pressures on emerging-market bond funds.
“If the situation in Ukraine fails to de-escalate, we believe flow pressure on EM funds could impact markets such as Hungary, South Africa and Turkey, which have minimal economic linkages with Russia and Ukraine,” they said.