Europe close: Stocks bounce back on hopes for diplomatic solution to Ukraine crisis

European shares recovered most of the previous session's losses on Tuesday on news that Russia had partially withdrawn troops from the border with Ukraine in the first signs a diplomatic resolution to the crisis could be achieved.

"While there is still a large concentration of troops in the region this sign of de-escalation was taken as a positive sign, contributing to the steady trickle of dip buying that has been going on throughout the month so far," said IG chief market analyst Chris Beauchamp.

"Despite the focus on inflation and the risks of tighter monetary policy investors seem to be emerging from hiding and are picking up bargains."

The pan-European Stoxx 600 index bounced back from Monday's sharp sell-off to gain 1.43% to 467.56.

Investors were also eyeing Tuesday's meeting between German Chancellor Olaf Scholz and Russian President Vladimir Putin after the latter appeared to be in favour of talks continuing with Western leaders keen to stop a war.

Sentiment was further boosted when the Russian Defence Ministry said some of the troops gathered around Ukraine had gone back to their garrisons, in a sign that it could be stepping back an invasion.

There were no details how many soldiers on were being loaded onto trains and trucks and sent back to base - which are still close to the border with Ukraine. Defence Ministry spokesman Igor Konashenkov said that some military exercises that have raised fears of an attack against Ukraine — including in Belarus and in the Black Sea — were continuing.

“Units of the southern and western military districts, having completed their tasks, have already begun loading onto rail and road transport and will begin moving to their military garrisons today,” he said.

On the equities front, shares in miner and commodities trader Glencore rose as it said it would pay $4bn (£3bn) to shareholders after reporting an 84% increase in underlying earnings boosted by soaring prices.

Randstad shares rose 5% after the recruitment firm topped market forecasts for fourth-quarter earnings, helped by some big multinational clients going on a hiring spree.

French IT consultancy Capgemini rose despite warning that its operating margin this year will likely be held back by inflationary pressures on salary and the cost of returning to offices.