By Sruthi Shankar

(Reuters) -European stocks gained cautiously on Wednesday in the hope of a decrease in tensions between Russia, Ukraine. However, accelerating inflation has kept a lid on Britain’s blue-chip index.

The index across the continent rose 0.3%. This was in addition to the 1.4% rise on Tuesday, when Moscow said it was returning troops from Ukraine. It is believed that this de-escalation occurred.

Concerns remained as Kyiv blamed Russia for the cyberattack and Britain agreed with the United States that it was not certain the pullout was true.

The past week has seen riskier assets suffer, as volatility gauges have jumped to new highs in January on the back of Russia’s invasion fears. Inflation fears are also being heightened by surging oil price.

Frederique Carrier from RBC Wealth Management, heads investment strategy. “A lot (the risks) seem to be in price. But we wouldn’t make an investment decision on the basis of a geopolitical incident.” “Historically, wars have had relatively limited impact on the market except for when there is an oil shortage that itself causes a recession.

After data revealed that consumer prices rose at an annual rate of nearly 30% last month, the UK indexes trail other major European indicators. This boosted expectations that the Bank of England would raise interest rates for the third consecutive year.

Miners and oil & gas drove gains in Europe, as most metal and oil prices made headway. [O/R] [MET/L]

Swedish Match Tobacco Group gained 6.3% on the proposal of a rise in its annual dividend. Air Liquide France (OTC) rose 2.9% due to a forecast for a larger annual profit.

Schindler, the Swiss elevator maker, plunged 5.0% upon warnings about its China business contracting in 2022 as a result of construction delays and material cost inflation.

Globally, European earnings were largely positive with analysts predicting a 58.6% increase in fourth-quarter profits for companies on STOXX. This is according to Refinitiv IBES estimates which are marginally more optimistic than the 56.2% prediction earlier this month.

Ericsson (BSD:) fell 9.1% after it revealed that an internal investigation into its 2019 compliance rules in Iraq had found significant breaches.

Delivery Hero fell 7.5% Deutsche Bank (DE:) The German online food delivery company, Take-Out German has been downgraded to Hold. This was due to limited information on its refinance and potential capital raise.