Europe midday: Shares cling on to gains as Ukraine tensions ease

European shares clung on to thin gains at midday as investors cautiously welcomed a partial withdrawal of Russian troops from the border with Ukraine and digested inflation data from the UK and China.

The pan-regional Stoxx 600 index was up by 0.10% after slipping into the red briefly. An announcement from Moscow that it was pulling back some troops helped US and Asian equities overnight, although Wall Street futures were all lower in a sign that investors are still wary of geopolitical tensions.

In economic news, British consumer prices rose at the fastest annual pace in nearly 30 years in January to hit an annual rate of 5.5%, as households face a continuing squeeze with wages failing to keep pace. The UK's FTSE 100 index was down on the news.

Euro area industrial production jumped past forecasts at the end of 2021 on the back of a surge in demand for capital goods. In seasonally adjusted terms, total output expanded at a month-on-month pace of 1.2% against a consensus: 0.1%.

Production of capital goods was strongest, rising by 2.6% on the month, alongside a 0.5% increase in that of intermediate goods and a 0.4% rise in that of non-durable consumer goods.

Chinese inflation eased in January as food prices fell and factory gate inflation slowed, official figures showed. Consumer inflation slowed to an annual rate of 0.9% from 1.5% a month earlier and was lower than the 1% average economists' estimate. Producer price inflation eased to 9.1% from 10.3%, undershooting expectations for a 9.5% reading.

That news came a day after Tuesday's US data showed core factory gate inflation, which is the cost for producers after stripping out food and energy, posted its biggest gain in a year.

Eyes will now turn to minutes from the US Federal Reserve's last meeting, due to be released later on Wednesday, for signs of whether policymakers will be keen on a larger half-point rate rise at their March meeting.

In equity news, Swedish Match shares gained after the tobacco company lifted its annual dividend, while French lottery operator La Francaise des Jeux gained also rose as it raised 2025 targets after better-than-expected annual results.

French industrial gases company Air Liquide was up as it raised annual profits guidance.

On the downside, shares in Ericsson slumped by more than 13% after the telecoms giant said an internal investigation in 2019 found serious breaches of its compliance rules in Iraq.

Swedish IVF company Vitrolife fell more than 9% after reporting a fall in fourth-quarter net income.