Asia stocks rally as fears of Russia invading Ukraine wane

Asian shares rallied on Wednesday as fears of a Russian invasion of the Ukraine this week dissipated after Moscow indicated it was returning some troops to base in an apparent de-escalation, delivering investors a measure of relief.

The tension between world powers over the Ukraine situation, which has developed into one of the deepest crises in East-West relations for decades, has been front-and-centre of investors' minds.

But while the immediate risk of a flare-up in tensions over Ukraine waned, some market watchers warned that save-haven assets could find a renewed bid in the case of new escalations over the conflict. There seems to be a growing belief that (Russian President Vladimir) Putin is leaning on a diplomatic solution and the market has walked back some positioning placed for an all-out escalation.

Investors' attention was also turning to economic and monetary policy developments amid ongoing speculation the U.S. Federal Reserve might raise rates by a full 50 basis points in March.