Europe's main stocks index roared back today, lifting off nine-month lows with banks leading a broad-based rally as investors hunted for bargains following a bruising sell-off after Russia's invasion of Ukraine.
Hopes for diplomacy aided sentiment after the Kremlin said Russian President Vladimir Putin is ready to send a delegation to Minsk for negotiations with representatives of Ukraine.
This comes after missiles pounded Kyiv as Russian forces pressed their advance.
The STOXX 600 ended the day up 3.3%, after dropping to May lows on Thursday.
All major indices jumped more than 3%, with London's FTSE 100 up almost 4%.
The rally made back all of Thursday's steep losses, but was not enough to pull the benchmark pan-European STOXX 600 index up for the week as the geopolitical tensions sent investors fleeing from riskier assets.
The index marked its second week in the red, down 1.6%, and is off about 8% from its peak in January.
"We don't think this is a time to be outright negative on equities - sentiment is already poor, at least some of the risks have been priced in," said Mark Haefele, chief investment officer at UBS Global Wealth Management.
Banks jumped 4.3% to regain half of the previous session's dive.
But they braced for impact from likely new sanctions from the West on Russia that could halt Russian banks' access to European financial markets.
The possibility of the conflict slowing the hawkish pace of central banks have also weighed on lenders.
The European Central Bank affirmed its commitment to ensure price and financial stability on Thursday.
The mood remained fragile going into the weekend as was evident by defensive buying. Industrial stocks, utilities, healthcare and consumer staples were among the biggest boost to the STOXX 600.
"As long as uncertainty persists we expect (European equities) to remain volatile and defensive," said HSBC analysts in a note.
"Commodity sensitive sectors such as energy and basic materials may also perform strongly, thereby reversing the value rally... The scale of action taken by NATO countries is likely to determine how markets react."
With oil and gas prices soaring in the wake of the Ukraine crisis, investors fear inflation will run even hotter and disrupt economic recovery in the euro zone due to its heavy reliance on Russia for gas supplies.
The Ukraine conflict may reduce the euro zone's economic output by 0.3%-0.4% this year, the ECB's chief economist said.
Goldman Sachs cut its 12-month target for STOXX 600 to 490 - about 8% higher from current levels - from 530.
Among individual stock, Porsche and Volkswagen gained 3.8% and 5.2% respectively after the carmakers fleshed out details of a possible Porsche listing.
French car parts maker Valeo dropped 10.5% after warning on core profit margin.
On Wall Street, the Dow and the S&P 500 index rose today, building on a rally in the previous session after the Kremlin said Russian President Vladimir Putin is ready to send a delegation to Minsk for negotiations with Ukraine.
The news calmed investor nerves after fears about the fallout from Russia's invasion of Ukraine and harsh sanctions from the West triggered a massive selloff across global markets earlier this week.
"Whether this is true or not that was the catalyst to drive us up. We continue to be in a choppy headline driven market," said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas.
"In 2020 we were buying the dip and selling them three days later and making money, in this environment, you might be buying the dip and selling it 5 minutes later."
Eight of the 11 major S&P sectors advanced in early trading, with energy and financials up 1.7% and 1.3%, respectively.
Sectors such as information technology and consumer discretionary, which houses some of the megacap companies, underperformed after rallying sharply in the previous session.
At 10:12 am ET, the Dow Jones Industrial Average was up 256.49 points, or 0.77%, at 33,480.32, the S&P 500 was up 20.90 points, or 0.49%, at 4,309.60, and the Nasdaq Composite was down 43.89 points, or 0.33%, at 13,429.69.
Global stocks rose, while oil prices fell below $100 a barrel and safe-haven gold came off 18-month highs.
Wall Street bounced back in a late-session rally on Thursday, led by a 3% gain in Nasdaq, after a coordinated response by the West in the form of sanctions were seen as softer than many investors had feared.
Still, the major indexes are tracking their third straight weekly declines as escalating geopolitical tensions poses a double whammy for investors already worried about aggressive policy tightening plans by the Federal Reserve.
Defense stocks Lockheed Martin Corp, Northrop Grumman Corp and L3Harris Technologies Inc inched higher for a second straight day.
Etsy Inc jumped 5.2% after the online crafts retailer beat estimates for fourth-quarter results, boosted by strong holiday demand for gifts and other products on its online marketplace.
Advancing issues outnumbered decliners by a 1.55-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.08-to-1 ratio on the Nasdaq.
The S&P index recorded 3 new 52-week highs and no new lows, while the Nasdaq recorded 14 new highs and 37 new lows.
Oil prices drop
Oil prices slipped today after sharp rises earlier in the session on concern over potential global supply disruptions from sanctions on major crude exporter Russia.
The April Brent crude futures contract was down $2.17, or 2.2%, to $96.91 a barrel at 1621 GMT, after climbing as high as $101.99. The more active May contract shed $1.79 cents, or 1.9%, to $93.63.
US West Texas Intermediate (WTI) crude fell $1.58, or 1.7%, to $91.23 a barrel, after hitting a session high of $95.64.
For the week, Brent was set to rise about 3.5%, while WTI was on track to fall around 0.2%.
On Thursday, Russia's invasion of Ukraine boosted prices above $100 a barrel for the first time since 2014, with Brent touching $105, before paring gains by the close of trade.
The assault was the biggest attack on a European state since World War Two, prompting tens of thousands of people to flee their homes.
On Friday, Russian missiles pounded Kyiv, families cowered in shelters and authorities told residents to prepare Molotov cocktails to defend Ukraine's capital from an assault that the mayor said had already begun with saboteurs in the city.
On Thursday, US President Joe Biden responded to the invasion with a wave of sanctions that impede Russia's ability to do business in major currencies along with sanctions against banks and state-owned enterprises.
Britain, Japan, Canada, Australia and the European Union also unveiled sanctions, including a move by Germany to halt certification of an $11 billion Russian gas pipeline.
However, Russia will not have its oil and gas flows specifically targeted by sanctions, a US official said.
The country is the world's second-largest crude producer and a major natural gas provider to Europe.
Biden also said the United States is working with other countries on a combined release of additional oil from their strategic crude reserves.
"Obviously the talk of the SPR (Strategic Petroleum Reserve) is still out there and that's been a negative factor, but uncertainty going into the weekend is going to be supportive," said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Top buyers of Russian oil, however, are struggling to secure guarantees at Western banks or find ships, sources told Reuters.
A deal among OPEC+ oil producers is showing no cracks so far, OPEC+ sources told Reuters, and the group is likely to stick to a planned output rise of 400,000 barrels a day in April despite crude topping $100 a barrel.
The alliance, which groups the Organization of the Petroleum Exporting Countries and producers including Russia, meets on Wednesday to make the decision.
