(Sharecast News) - London stocks closed above the waterline on Tuesday, amid hopes of progress in Russia-Ukraine peace talks.
The FTSE 100 ended the session up 0.86% at 7,537.25, and the FTSE 250 was 2% firmer at 21,491.97.
Sterling was in a mixed state, last rising 0.4% on the dollar to $1.3140, as it weakened 0.76% against the euro to change hands at €1.1827.
"Today's market has the feel of trades being unwound, as short positions in stocks are closed, and latecomers to the oil rally are chased out, following news that Russia was continuing to scale back operations around Kyiv and that talks between the two sides continued to provide some progress," said IG chief market analyst Chris Beauchamp.
"Russian forces are being redeployed towards eastern Ukraine it seems, which suggests that the attempt to overrun the whole country, or at least seize the capital, has been halted for the time being."
It was reported earlier in the afternoon that Russia would "dramatically" scale back military operations near the Ukrainian capital of Kyiv.
The announcement, which included a pledge to reduce military activity around the city of Chernihiv as well, came as peace talks between Russia and Ukraine ended in Istanbul - the first face-to-face negotiations since 10 March.
Alexander Fomin, Russia's deputy minister of defence, said that to "increase mutual trust, and create the necessary conditions for future negotiations to agree and sign a peace deal with Ukraine," Moscow would "dramatically reduce military activities in the direction of Kyiv and Chernihiv, several times over," according to Russian news agency Tass.
It looked to be the first major concession Moscow had made since Russia invaded at the end of February.
Ukrainian negotiators confirmed they had proposed Ukraine would adopt neutral status in exchange for security guarantees, Reuters reported.
"These proposals will be considered in the near future, reported to the president, and our response will be given," said Russia's chief negotiator Vladimir Medinsky.
Turkey's foreign affairs minister, Mevlut Cavusoglu, who mediated at the peace talks, said significant progress had been made.
On home shores, UK shoppers looked to be increasingly turning to cheaper own-brand products according to fresh industry data, as grocery inflation rose to a near-decade high.
According to the latest research from retail consultancy Kantar, grocery price inflation was 5.2% in the four weeks to 20 March, the highest since April 2012.
In the 12 weeks to 20 March it was 4.2%, with prices rising fastest in savoury snacks and pet food, and falling in fresh bacon.
As a result, Kantar found that shoppers were increasingly turning to own-brand products, which now account for 50.6% of all spending.
"More and more we're going to see consumers and retailers take action to manage the growing cost of grocery baskets," said Fraser McKevitt, head of retail and consumer insight at Kantar.
"Consumers are increasingly turning to own label products, which are usually cheaper than branded alternatives.
"Own label sales are down in line with the wider market, but the proportion of spending on them versus brands has grown to 50.6%, up from 49.9% this time last year."
Consumer borrowing, meanwhile, rose sharply in February, with savings deposits falling as the cost of living increased, according to the Bank of England.
Households borrowed a net £1.9bn in consumer credit, up from £0.6bn a month earlier and almost double the pre-pandemic average of £1bn, the BoE said.
Analysts on average had expected £0.9bn of extra borrowing.
The increase was split between £1.5bn extra borrowing on credit cards and £0.4bn in other consumer credit such as car finance and personal loans.
Annual growth for all consumer credit hastened to 4.4% from 3.2% in January - the highest rate since February 2020.
Consumer borrowing fell during several months of the pandemic as households tightened their belts with fewer options for spending during lockdowns.
February's revival of borrowing, however, happened before the war on Ukraine and the intensifying cost of living crisis.
Across the pond, consumer confidence in the United States rebounded slightly in March, with the Conference Board's confidence index ticking up to 107.2 from a revised 105.7 in February - in line with expectations and following declines in January and February.
The present situation index, which is based on consumers' assessment of current business and labour market conditions, rose to 153.0 from 143.0 last month.
But the expectations index, based on the short-term outlook for income, business, and labour market conditions, fell to 76.6 from 80.8.
In equity markets, Russia-focused miner Polymetal International surged 35.39% after saying it was considering changes to its corporate structure including "distinct ownership in various jurisdictions" where the company operates.
Polymetal said deliberations were at an early stage.
Currys rallied 8.78% by the close, after markets blog Betaville suggested potential takeover interest in the electricals retailer.
Royal Mail reversed earlier losses to eke out gains of 0.17%, even after a downgrade to 'sell' from 'hold' at Deutsche Bank, which also slashed its price target to 275p from 680p.
Croda International was in the black by 5.26% after saying it was targeting sales of £1bn by 2025 in its consumer care segment.
It also described trading in the first three months of 2022 as "robust", including a strong start for consumer care.
On the downside, Barclays shares slumped 2.79% after a share placing.
According to terms seen by Bloomberg, 575 million shares in the bank were placed via Goldman Sachs, at prices between 147.50p and 150.75p a share.
A trader said it was "unconfirmed whether it was Qatar Investment Authority" who sold the shares.
Bellway was on the back foot by 3.88%, after the housebuilder announced a big increase in its dividend and an 8.9% jump in underlying first-half profit, but warned over potential building safety costs.
Government contractor Babcock International lost 4.93% after reports it was in talks to offload the bulk of its emergency aviation services division, which includes Britain's air ambulance fleet.
According to Sky News, Babcock was in advanced negotiations with London-based infrastructure investor Ancala Partners about acquiring a substantial part of the business it bought in 2014.
Market Movers
FTSE 100 (UKX) 7,537.25 0.86%
FTSE 250 (MCX) 21,491.97 2.00%
techMARK (TASX) 4,384.54 1.45%
FTSE 100 - Risers
Melrose Industries (MRO) 133.80p 7.47%
International Consolidated Airlines Group SA (CDI) (IAG) 149.50p 6.85%
Ocado Group (OCDO) 1,161.50p 6.61%
Scottish Mortgage Inv Trust (SMT) 1,070.50p 6.15%
Coca-Cola HBC AG (CDI) (CCH) 1,681.50p 5.79%
JD Sports Fashion (JD.) 160.35p 5.60%
Whitbread (WTB) 2,934.00p 5.58%
Smith (DS) (SMDS) 341.70p 5.56%
Prudential (PRU) 1,133.00p 5.35%
Intermediate Capital Group (ICP) 1,792.00p 5.20%
FTSE 100 - Fallers
Glencore (GLEN) 480.65p -3.79%
BAE Systems (BA.) 713.00p -2.54%
Barclays (BARC) 156.44p -2.52%
BP (BP.) 371.35p -2.51%
Anglo American (AAL) 3,801.00p -2.44%
British American Tobacco (BATS) 3,219.00p -2.42%
B&M European Value Retail S.A. (DI) (BME) 546.00p -2.33%
Shell (SHEL) 2,022.00p -1.92%
Imperial Brands (IMB) 1,632.00p -1.69%
Fresnillo (FRES) 715.20p -1.38%
FTSE 250 - Risers
Polymetal International (POLY) 339.00p 39.51%
Ferrexpo (FXPO) 194.50p 15.84%
Wizz Air Holdings (WIZZ) 3,018.00p 13.67%
TBC Bank Group (TBCG) 1,170.00p 12.50%
Aston Martin Lagonda Global Holdings (AML) 1,029.50p 10.68%
Baltic Classifieds Group (BCG) 142.50p 10.47%
Trustpilot Group (TRST) 155.60p 10.28%
Trainline (TRN) 214.40p 9.95%
Bridgepoint Group (Reg S) (BPT) 347.50p 9.79%
Currys (CURY) 100.30p 8.02%
FTSE 250 - Fallers
Babcock International Group (BAB) 328.00p -4.93%
Bellway (BWY) 2,488.00p -4.31%
Energean (ENOG) 1,105.00p -3.91%
Hochschild Mining (HOC) 125.40p -3.91%
Clarkson (CKN) 3,765.00p -3.21%
Centamin (DI) (CEY) 88.58p -2.25%
Harbour Energy (HBR) 472.20p -2.24%
BlackRock World Mining Trust (BRWM) 730.00p -1.75%
QinetiQ Group (QQ.) 299.40p -1.64%
Chemring Group (CHG) 321.00p -1.53%