Stella Qiu, Alun John

BEIJING (Reuters – Asian shares surged Thursday as Wall Street gains were mirrored by Wall Street. Though sentiment was buoyed by planned diplomatic talks between Russia & Ukraine, analysts warn that this rally is vulnerable to a sudden reversal.

Oil prices gained some momentum after dropping more than 12% in the preceding session. However, United Arab Emirates committed to increasing oil output to alleviate market turmoil.

MSCI’s Asia-Pacific index, the broadest outside of Japan, saw 1.6% growth in early trade. Australian shares increased by 3.4%, while Australian shares rose by 1%.

The Chinese blue chip market rose 1.9% while Hong Kong’s saw a 1.8% increase.

Ray Attrill from National Australia Bank, Head of FX Strategy (OTC) said that comments coming out of Russia or Ukraine offer some hope of a compromise. He made the statement in a note on Wednesday.

Russian foreign minister Sergei Lavrov has arrived in Turkey before talks with Dmytro Kuleba, his Ukrainian counterpart. This will be their first meeting since Russia invaded Ukraine just two weeks ago.

Attrill said that Russia’s bombing of a Mariupol hospital was an accusation against Ukraine. He also warned of the possibility of further Western retaliation.

While the barrel cost $110.19 an barrel rose by 1.37%, it was up 22% at $113.2 per barrel.

A draft declaration was released Thursday by the European Union stating that it will stop buying Russian oil, coal and gas. This is in line with its efforts to lessen dependence on Russian energy sources.

On Tuesday, the United States prohibited oil and gas imports to Russia. However, Britain stated that it will phase out Russian oil imports before the end of this year.

Higher oil prices will make it more likely that the U.S. Federal Reserve raises interest rates by 25 basis point at its next policy meeting to contain runaway inflation.

According to a Reuters poll, data due Thursday will show that U.S. consumer inflation is at 7.9% annually.

David Chao (Hong Kong-based global strategist for Invesco), stated that the conflict in Ukraine will likely lead to more inflationary pressures on consumers. This could cause a supply shock.

As investors evaluate the effect of the Ukraine conflict on inflation, and potential Fed actions, U.S. Equities may be in a holding mode with greater volatility.

Stocks in the United States surged overnight led by financial- and technology shares. While the gained 3.59%, the rose 2%.

Amazon.com Inc. (NASDAQ:) announced Wednesday that its board had approved a 20 for 1 split of Amazon.com’s common stock. It also authorized a $10 billion buyback program. This sent the shares of Amazon.com Inc. up by 7% during extended trading.

After rising 1.6% on Wednesday and gains in European stocks as well as a selloff in bonds, the euro was at $1.1047. The safe-haven yen dropped to a low of 116 USD one month ago. [FRX/]

Referring to Wednesday’s close in the U.S. at 1.948%, benchmark saw a yield of 1.9392%.

This yield rises in line with the expectations of traders of higher Fed Fund rates and reached 1.6697% on a U.S.-close of 1.678%.