LONDON- World stocks rallied on Wednesday, putting aside worries about rising interest rates for now to take some comfort from positive headlines on Ukraine and upbeat earnings, while a semblance of calm returned to battered sovereign bond markets.

The pan-European STOXX 600 climbed 1.4%, MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.5% to a two-week high and the blue-chip Nikkei closed just over 1% higher.

And Wall Street, where shares rallied on Tuesday, were set for a strong open, trade in stock futures suggested.

News headlines over recent days suggesting tensions between the West and Russia over Ukraine may be easing and a string of upbeat earnings lifted sentiment towards risk assets.

French President Emmanuel Macron, who met Russian President Vladimir Putin on Monday, said on Tuesday he believed steps can be taken to de-escalate the crisis in which Russia has massed troops near Ukraine but says it does not plan an attack. 

On the earnings front, French fund manager Amundi on Wednesday posted a strong rise in earnings, quarterly results from British drugmaker GSK beat forecasts and Dutch bank ABN Amro reported a higher-than-expected net profit of 552 million euros for the fourth quarter.

"Last few days have seen positive headlines over Russia/Ukraine with negotiations between Macron and Putin and reports of German efforts to deescalate the crisis," said Mohit Kumar, managing director, interest rates strategy, Jefferies.

"But we retain our view that a greater concern for risky assets is a removal of central bank accommodation as markets have become used to abundant liquidity and low rates for a long period of time."

Major central banks have turned more hawkish in the face of stickier than anticipated inflation, sending bond yields higher.

The European Central Bank could raise rates this year, new Bundesbank President Joachim Nagel said in a newspaper interview. 

Barring any big surprises, Thursday's U.S. consumer price index meanwhile should cement expectations the Federal Reserve will raise rates next month, with a strong print offering further support to those tipping a larger 50 basis point rise.

Japan's 10-year bond yield touched 0.215%, its highest since January 2016. But after sharp selling, broader bond markets stabilised with prices rising and yields falling.

The U.S. 10-year Treasury yield was down 3 basis points at 1.93% , not far off the highest levels since late 2019 hit on Tuesday.

Germany's 10-year Bund yield was 4 bps lower on the day at 0.23%.

"I rarely use the move overdone in markets, but I would say this move in bonds has been overdone. The speed has been so quick since Thursday, a correction was due," said Piet Haines Christiansen, chief strategist, Danske Bank. "We still have the U.S. CPI tomorrow, so let's see what happens after that."

Last week's hawkish stance by the ECB has left Bund yields 20 bps higher in the month so far and on track for their biggest monthly rise in a year.

Rising borrowing costs and signs of rates normalisation in Europe have boosted bank stocks - a sub-index of European banking stocks is at its highest since 2018, up over 3% since Thursday's ECB meeting.

Currency markets were relatively quiet, with the dollar index, which measures the greenback against six peers, a touch lower at 95.466. 

Oil prices slipped for a third session on profit taking on concerns of a possible rise in supplies from Iran.

Brent crude futures fell 0.5%, to $90.36 a barrel, while U.S. crude was at $88.77 a barrel, down 0.7%. 

Spot gold was steady at $1,826.3 per ounce. 

(Reporting by Dhara Ranasinghe; Editing by Timothy Heritage and Nick Macfie) ((Dhara.Ranasinghe@thomsonreuters.com; +442075422684;))