European shares were steady on Wednesday as the United States and Russia planned talks to ease tensions over Ukraine, while Spain and Italy outperformed on fresh signs of an economic rebound in those countries.
The pan-European FTSEurofirst 300 index, which fell 2.2 percent at the start of the week on fears of a conflict between Russia and Ukraine, was flat at 1,344.84 points in late session trading.
The euro zone's blue-chip Euro STOXX 50 index inched up 0.1 percent to 3,137.84 points, but the Spanish and Italian markets - dubbed by the "periphery" many investors, as compared to the "core" of Germany and France - fared better.
Italy's benchmark FTSE MIB equity index rose 0.9 percent while Spain's benchmark IBEX index advanced by 0.8 percent, outperforming falls in Germany and France.
The Milan and Madrid bourses rose after Markit composite purchasing managers' indexes (PMIs) for Italy and Spain both beat forecasts and came in above the 50 mark that separates growth from contraction.
Analysts added that speculation about fresh action from the European Central Bank on Thursday to spur the region's economy and fend off the threat of ultra-low inflation was acting as an extra support for European equities.
Andrea Williams, European equities fund manager at Royal London Asset Management, backed Italian and Spanish stocks such as Italian airport and motorway operator Atlantia, Spanish electricity grid operator Red Electrica and Spanish oil group Repsol.
"We don't have a lot of exposure to the periphery but I can see that their economies are improving," said Williams.
In spite of a hit to equity markets this week from Ukraine, European stock markets have maintained their upwards trajectory from last year, with the FTSEurofirst 300 up by around 2 percent after having risen 16 percent in 2013.
Russia has effectively occupied Ukraine's Crimea region in the wake of the toppling in Kiev of the former pro-Moscow Ukrainian President Viktor Yanukovich.
German sportswear group Adidas fell 2.9 percent in heavy volumes on Wednesday after warning that its 2014 results would take a significant hit from weakening emerging-market currencies such as Russia's rouble.
However, many investors remain confident that the Ukraine situation will gradually de-escalate, with Russia set to discuss the situation with the United States on Wednesday.
"I would expect an eventual political solution, which is why the markets are taking it in their stride for now," said Takis Christodoulopoulos, an analyst at hedge fund Toscafund.
(By Sudip Kar-Gupta)