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Europe shares end higher on Ukraine; Hermes falls

European shares ended the day firmly in the green on Wednesday, amid hopes that Ukraine and Russia were nearing a cease-fire agreement.

Ukraine deal with Russia?

The pan-European FTSEurofirst 300 closed up around 0.7 percent at 1,385.84. the index spiked earlier in the day following a statement from Ukraine that a "permanent" cease-fire had been reached in eastern Ukraine—although this comment was later toned down.

Russian President Vladimir Putin said a solution to the conflict in eastern Ukraine could be reached at talks on Friday; Ukrainian President Petro Poroshenko warned that Putin's words were an attempt to avoid new sanctions from the West.

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The Russian MICEX index closed up around 3.5 percent and all major European bourses ended higher.

The U.K.'s benchmark FTSE 100 ended up around 0.7 percent, underperforming the French CAC 40 and the German DAX, which closed provisionally 0.9 percent and 1.1 percent higher, respectively.

Read MoreStocks spike amid confusion over Ukraine cease-fire

Downward pressure on the U.K. index came from the weak performance in some of the major mining companies. Stocks like BHP Billiton and Rio Tinto have come under pressure in recent weeks as iron prices have approached five-year lows.

Meanwhile, U.S., stocks shaved early gains to trade mixed on Wednesday, amid the possibility of easing tensions between Ukraine and Russia.

Handbag war truce

France's LVMH agreed not to purchase any shares in rival Hermes for the next five years on Wednesday, burying hopes the bigger luxury group would make a full takeover bid.

Shares of Hermes traded down as much as 9 percent during the session, before paring losses to close around 2.6 percent in the red. LVMH shares closed around 2.9 percent higher on the news.

Read More'Standoff' of French luxury companies ends

Hugo Boss shares closed down around 5.7 percent, after the investment vehicle of Permira Holdings decided to reduce its stake in the German firm.

Meanwhile, FTSE 100-listed equipment rental firm Ashtead rose by around 3.6 percent after the company raised its full-year guidance and reported a profit surge in the first half of its trading year.

PMI disappoints

A second reading for the euro zone's composite purchasing managers' index (PMI) showed that business in the region grew at its weakest pace this year last month. PMI fell to an eight-month low of 52.5, below July's reading of 53.8.

The new figures come ahead of a rate decision by the European Central Bank (ECB) on Thursday. Some analysts are anticipating that the ECB could announce some more stimulus measures.

"Feeble inflation data and weak activity reads in manufacturing and services, coupled with Mario Draghi's comments at the June meeting highlight that QE (quantitative easing) is certainly a policy tool of the future," Evan Lucas, market strategist at IG, said in a research note.

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