Global Shares Mostly Lower as Markets Watch Ukraine Tensions

TOKYO (AP) -- European benchmarks jumped early Tuesday as the Kremlin and the West held out the possibility of a diplomatic path out of the Ukraine crisis. Asian shares were mostly lower.

France's CAC 40 surged 1.6% in early trading to 26,865.19, while Germany's DAX jumped 1.2% to 15,294.66. Britain's FTSE 100 gained 0.8% to 7,594.32. On Wall Street, the future for the Dow Jones Industrial Average rose 0.9% to 34,781.00. The S&P 500 future rose 1.1% to 34,781.00.

Russian Foreign Minister Sergey Lavrov signaled Monday in a made-for-television meeting with President Vladimir Putin that Moscow would keep talking about the security grievances that have led to the Ukraine crisis.

Russia denies it plans to invade but has massed more than 130,000 troops on Ukraine's borders. The comments raised hope that war could be averted even as the U.S., Britain and other allies warned troops could move on Ukraine as soon as Wednesday.

Markets were spooked Monday after the U.S. said it was closing its embassy in Ukraine and moving all remaining staffers there to a city near the Polish border.

In Asian trading, Japan's benchmark Nikkei 225 shed 0.8% to finish at 26,865.19. Australia's S&P/ASX 200 sank 0.5% to 7,206.90. South Korea's Kospi lost 1.0% to 22,676.54. Hong Kong's Hang Seng declined 0.8% to 24,355.71, while the Shanghai Composite rose 0.5% to 3,446.09.

An early rally in Tokyo soon ran out of steam. Data released Tuesday showed the economy grew at an annual rate of 5.4% in October-December. Pandemic restrictions were relaxed for a time after infections fell sharply before rebounding again with omicron outbreaks.

"While Japan's outlook is challenged by virus resurgences and supply chain disruptions, the Q4 data highlighted the potential for pent-up consumer demand once virus risks eventually abate," said Yeap Jun Rong, market strategist at IG in Singapore.

Investors have been trying to gauge how stocks and the broader economy will be affected the Federal Reserve's move to raise interest rates to quell surging inflation.

The central bank is expected to start raising its benchmark interest rate in March and Wall Street expects as many as seven rate hikes this year after last week's report that inflation jumped 7.5% in January from a year ago, the fastest increase in four decades.

Investors also have their eye on the latest round of corporate earnings, in part to get a better understanding of how companies are dealing with high inflation. Some of the more notable U.S. companies reporting earnings this week include Airbnb on Tuesday, DoorDash on Wednesday and Walmart on Thursday.

This week also brings updates on inflation and how that might be impacting consumer spending. The U.S. Labor Department will release its January report for prices at the wholesale level on Tuesday and the Commerce Department will release its January retail sales report on Wednesday.

In energy trading, benchmark U.S. crude lost $2.61 to $92.85 a barrel in electronic trading on the New York Mercantile Exchange. It climbed 2.5% on Monday, while natural gas prices jumped 6.4%. Russia is a major energy producer and military action that disrupts supplies could jolt markets and global industries. Brent crude, the international pricing standard, fell $2.27 to $94.21 a barrel.

In currency trading, the U.S. dollar rose to 115.60 Japanese yen from 115.55 yen. The euro cost $1.1341, up from $1.1306.