LONDON – Stocks rose and oil prices pulled back yesterday as fears of a wider Middle East conflict eased even as Israel and Iran pounded each other with missiles for a fourth day. 

The dollar and safe-haven gold declined slightly.

“European shares were surprisingly resilient against a backdrop of uncertainty,” said Russ Mould, investment director at AJ Bell. “The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further,” he cautioned.

London, Paris and Frankfurt stock markets were all higher in midday trade.

That tracked gains in Asia, where Tokyo closed up 1.3%, boosted by a weaker yen, while Hong Kong and Shanghai also advanced.

Israel’s surprise strike against Iranian military and nuclear sites on Friday – killing top commanders and scientists – sent crude prices soaring as much as 13% at one point on fears about supplies from the region.

However, concerns over the conflict spreading appeared to have eased, with both main oil contracts retreating yesterday.

“Financial markets are very good at absorbing geopolitical risk, and OPEC+’s supply boost is also helping to cushion the blow,” said Kathleen Brooks, research director at trading group XTB.

“There may need to be a major escalation in the conflict before we get another sharp upswing in oil and gold prices,” she added.

Analysts had warned that the spike could send inflation surging globally again, dealing a blow to long-running efforts by governments and central banks to get it under control.

Investors were gearing up for monetary policy decisions this week from the US Federal Reserve, Bank of England and Bank of Japan.

All are expected to stand pat but traders will be keeping a close watch on their statements for clues on interest-rate outlooks, with US officials under pressure from president Donald Trump to cut.

There was little major reaction to data showing China’s factory output grew slower than expected last month as trade war pressures bit, while retail sales topped forecasts.

 – Nampa/AFP