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European markets close higher on hopes for Russia-Ukraine cease-fire; Stoxx 600 up 3%

LONDON — European stocks closed higher on Wednesday amid renewed optimism of progress in talks between Russia and Ukraine, and as global markets await the latest monetary policy figures and economic forecasts from the U.S. Federal Reserve.

The pan-European Stoxx 600 index provisionally ended up around 3%, with major bourses and almost all sectors in positive territory. Tech stocks rose more than 6.5% to lead the gains, while utilities bucked the trend, slipping 0.8%.

Regional markets got a boost on reports that progress was being made in ongoing talks between Russia and Ukraine in a bid to find a peace deal. Russia’s Foreign Minister Sergey Lavrov said Wednesday that some parts of an agreement were close to being agreed, with “neutral” status for Kyiv being “seriously discussed,” he told RBC News.

Looking at individual stocks, shares of BMW were up 4.3% on Germany’s DAX index despite the German auto giant warning that it can’t give accurate guidance amid the geopolitical uncertainty in Europe, and that production interruptions should continue to be expected in light of Russia’s war on Ukraine. CEO Oliver Zipse told CNBC on Wednesday that the fallout from supply bottlenecks is improving, however.

Shares of clothing giant Inditex slipped 1.5% after the Spanish company reported a sharp rise in 2021 revenues and said that store and online sales between Feb. 1 and March 13 are tracking 33% higher year on year.

Shares of E.On, Germany’s largest energy firm, were down 0.5% after the company said it expects its core profit to fall this year because of the phasing out of nuclear power, and said the war in Ukraine could dent the value of its stake in the Nord Stream 1 gas pipeline, Reuters reported.

Global markets are broadly positive ahead of the conclusion of the Federal Reserve’s two-day meeting on Wednesday, where the central bank is widely expected to raise rates by a quarter-point, the first hike since 2018.

Watchers are also expecting the central bank to offer a new quarterly forecast that could indicate five or six more hikes this year. The Fed is expected to announce an interest rate decision and economic projections at 2 p.m. ET on Wednesday, which will be followed by a briefing from Federal Reserve Chair Jerome Powell.

U.S. stocks rallied for a second day ahead of the meeting’s outcome while shares in Asia-Pacific were mostly higher in Wednesday trade, though markets in mainland China were mixed amid the Covid resurgence in the country.

Russia’s invasion of Ukraine continues to dominate global attention. The Russian state is due to pay $117 million in interest on two sovereign eurobonds on Wednesday, the first of four payment dates to creditors in March alone as the country faces the prospect of defaulting on its debt.

That comes after international sanctions on Russia’s central bank have blocked off a substantial portion of the country’s foreign exchange reserves following Russia’s invasion of Ukraine.

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— CNBC’s Samantha Subin and Eustance Huang contributed to this market report.

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