(MENAFN- AFP) European stocks edged higher on Friday, recovering ground lost the previous day on simmering Ukraine tensions, but London gains were tempered by a profits warning from beleaguered supermarket giant Tesco.
In late morning deals, London's benchmark FTSE 100 index added 0.12 percent to 6,813.79 points.
Frankfurt's DAX 30 index gained 0.16 percent to 9,477.39 points and the Paris CAC 40 rose 0.10 percent to 4,370.21 compared with Thursday's close.
The euro firmed, although new official eurozone data showed a further fall of inflation to 0.3 percent in August. Analysts said this increased the chances that the European Central Bank would ease its monetary policy further.
Europe's main stock markets had fallen on Thursday as claims of Russian troops actively fighting in east Ukraine raised concerns over a possible military confrontation between Kiev and its former Soviet master.
- Stocks uncertain -
"European equities have opened in an equivocal mood ... as traders struggle to assess the flare-up in Ukraine," said Capital Spreads dealer Jonathan Sudaria on Friday.
"It has been blatant to see that the Russian military has been crossing into Ukraine."
The crisis meanwhile took a new twist on Friday after Russia warned of a "high risk" of disruptions to supplies of Russian gas to Europe as international tensions mounted.
Sudaria added: "Although markets are trading a touch weaker over the last couple of sessions, they are not reacting as though this was a full on territorial invasion ... However, Russia has persistently and consistently escalated the conflict but with no clear end objective."
In London, meanwhile, Britain's troubled supermarket giant Tesco saw its share price plunge by as much as eight percent after warning on profits and slashing its dividend. The group blamed challenging trade and high investment costs.
Trading profit was forecast at between £2.4 billion and £2.5 billion ($4.0 billion and $4.2 billion, 3.0 billion euros and 3.15 billion euros) in the 2014/2015 financial year, Tesco said. That was well below market expectations.
Tesco also slashed its interim shareholder dividend by a hefty 75 percent to 1.16 pence per share.
Britain's biggest retailer added that new chief executive Dave Lewis will start on Monday - one month earlier than planned - in order to carry out a review of every aspect of the business.
"Tesco has shocked the markets by announcing another profits warning, slashing its dividend by 75 percent and rushing in the new CEO Dave Lewis a month before he was originally due to start," said IG analyst Alistair McCaig.
"All this smacks of desperation ... Unsurprisingly, UK food retailers dominate the list of stocks falling in the FTSE with Sainsbury, Morrisons and Marks & Spencers all tumbling," he added.
In later morning deals, Tesco shares were down 5.38 percent at 233.05 pence.
Sainsbury stock was down 2.97 percent at 294.49 pence, Morrison fell 4.19 percent to 179.085 pence and M&S slid 2.03 percent to 429.2 pence.
In foreign exchange activity on Friday, the European single currency firmed to $1.3182 from $1.3181 late in New York on Thursday.
The euro eased to 79.40 pence from 79.47 pence late in New York on Thursday, while the pound rose to $1.6599 from $1.6585.
The price of gold declined to $1,285.40 an ounce, from $1,292 on Thursday on the London Bullion Market.
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