LONDON – European stocks opened higher on Tuesday, after a
downbeat Asian session, with world stocks set for their biggest monthly
drop since the pandemic hit markets in March 2020.

The move is attributed to fears over tensions between Russia and the West and the prospect of monetary policy tightening.

US Federal Reserve begins its two-day meeting on Tuesday. It is
expected to give guidance about the trajectory of monetary policy
tightening ahead of the meeting in March in which investors expect the
first post-pandemic rate hike.

monetary policy typically hurts riskier assets, such as equities, and
makes government bonds more attractive to investors.

After a weak Asian session in which stock indexes extended Wall Street's losses, European markets opened higher.

The STOXX 600 was up 0.5 percent, showing some signs of recovery after it dropped to its lowest since October on Monday.

London's FTSE 100 was up 0.3 percent.

But the MSCI world equity index, which tracks shares in 50 countries, was down 0.2 percent.

stocks have fallen 6.5 percent so far this month, the most since the 13.8 percent
monthly drop when the COVID-19 pandemic hit markets in February 2020.

we have seen in a combination of the rising geopolitical risk … in
combination with the market downside risk triggered by the more hawkish
Fed," said Eddie Cheng, head of international multi-asset investment at
Allspring Global Investments.

said the geopolitical risk surrounding Ukraine would last for much
longer, whereas investors were likely to get more certainty from the Fed
at the meeting this week.

world equity index has fallen below its 200-day moving average. The
last time this happened, stocks had a 30 percent drop and bounce.

Allspring's Cheng said there was unlikely to be such a drop this time,
in the absence of a driver as big as the start of the COVID-19 pandemic.

"We don't expect that equities are going to go all the way down just because of one geopolitical risk," he said.

sell-off in equities had limited impact on rates markets, with
investors pricing in about 100 basis points of rate hikes for the
Federal Reserve and Bank of England this year .

investors do not expect a rate hike at this week's Fed meeting, the
market is pricing in a 5.4 percent chance of this happening, according to
Refinitiv data on Eikon.

At 0915 GMT, the US 10-year yield was at 1.7778 percent, a touch higher on the day .

Germany's benchmark 10-year yield was up 3 bps at -0.073 percent, with bonds supported by the risk-averse tone.

The US dollar index was up 0.2 percent at 96.07 , while euro-dollar slipped .

Oil prices recovered some of the previous day's losses, as the geopolitical tensions fuelled supply fears

cryptocurrencies slipped further. Bitcoin was trading around $36,230
dollars. On Monday it hit a six-month low of $32,950.72, having halved
since its latest all-time high of $69,000 hit in November .