By – European stock markets traded largely lower Wednesday, handing back some of the previous session’s hefty gains amid skepticism over the likely success of the latest Ukraine-Russia peace talks. 

By 3:55 AM ET (0755 GMT), the DAX in Germany traded 1% lower, the CAC 40 in France fell 0.8%, while the U.K.’s FTSE 100 outperformed, climbing 0.2%.

Investor sentiment was boosted Tuesday after Russia stated it will sharply reduce military activity near the Ukrainian capital Kyiv following face-to-face peace talks between the two sides in Istanbul, with chief negotiator Vladimir Medinsky saying the country would take steps to “de-escalate” the conflict.

This prompted European equities to close sharply higher, with the DAX gaining 2.8% and the CAC 40 rising 3.1%.

However, the tone has become more circumspect Wednesday, with the Pentagon warning that Kyiv remains under threat and U.S. President Joe Biden saying he’ll wait and see whether Russia delivers on its pledge. 

“The good news from the Russia-Ukraine talks in Istanbul is not that Putin is suddenly acting in good faith,” said former Russian Foreign Minister Andrei Kozyrev on Twitter, “but that heroic Ukrainian resistance is making him look for off-ramps and diplomatic disguise.”

Meanwhile, Germany, Europe’s largest economy, is bracing for a cut-off of Russian gas supplies, activating the first phase of a national emergency plan. The move comes two days ahead of a deadline set by Russia for ‘unfriendly’ states to start paying for deliveries of Russian energy in rubles, rather than in euros or dollars.

Spanish inflation data gave a vivid illustration of the impact of the war on the Eurozone economy, jumping 9.8% from a year ago in March, surging at the fastest rate in almost four decades.

Italy and Germany will release their inflation numbers later in the session, feeding through to Friday’s Eurozone release, which is expected to show a fresh high considerably above the European Central Bank’s 2% target.

In corporate news, UBS (SIX:UBSG) stock fell 0.5% after the Swiss lender announced the results of its 2021 share buyback, spending 3.81 billion Swiss francs ($4.11 billion) repurchasing its shares equivalent to 6.49% of its share capital.

Oil prices rose Wednesday, rebounding after a two-day retreat following a fresh reminder of the tight nature of the market as data showed U.S. crude stocks fell sharply last week.

Data from the industry body, the American Petroleum Institute, showed U.S. crude inventories fell by 3 million barrels in the week ended March 25. The official data from the Energy Information Administration is due later in the session.

The oil market had dropped about 2% in the previous session following the progress in the Ukraine/Russia peace talks, and more than 7% on Monday on demand worries over fresh COVID-19 lockdowns in China, the world’s largest crude importer. 

By 3:55 AM ET, U.S. crude futures traded 2% higher at $106.30 a barrel, while the Brent contract rose 1.6% to $109.41. 

Additionally, gold futures

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