Volkswacht Bodensee - Oil dips under $100, stocks fall tracking Mideast war developments

With the conflict heading towards its third week, equity markets mostly dropped as investors grew increasingly worried about an extended crisis that could fan inflation and hammer the global economy.

"Fears of a burgeoning energy crisis remain front and centre for investors," noted Joshua Mahony, chief market analyst at Scope Markets.

"Inflationary fears are particularly prevalent with each day that passes."

Major central banks, which prior to the war's outbreak were heavily forecast to keep on cutting interest rates, are now widely expected next week to freeze borrowing costs or even hike to keep a lid on inflation.

While top economies have agreed to release some of their strategic crude reserves, analysts argue that the move does little to address supply blockages, with Iran having vowed to attack oil resources in the Middle East and keep choking the crucial Strait of Hormuz.

In a further bid to ease the situation, the US Treasury Department said it would temporarily allow the sale of Russian oil that is at sea.

German Chancellor Friedrich Merz on Friday called the decision "wrong", claiming it could help fund Moscow's war against Ukraine.

This after French President Emmanuel Macron said that easing sanctions on Moscow -- imposed over its war in Ukraine -- was "in no way" justified.

Moscow meanwhile urged the United States to lift more sanctions on its oil exports, saying it would help to stabilise global energy markets.

On foreign exchange markets, the dollar held its gains against major rivals owing to its safe-haven status and expectations that US interest rates will remain elevated longer than expected.

Next week's "interest-rate meetings at the Federal Reserve and the Bank of England -- and those of several of their global counterparts -- come at a delicate time", said AJ Bell investment director Russ Mould.

"Markets will be watching closely for any signals on how they plan to deal with surging oil and gas prices and whether they see it as a short-term bump to look through, or a development that has significantly altered the prospects for inflation and interest rates."

- Key figures at around 1100 GMT -

Brent North Sea Crude: DOWN 1.4 percent at $99.03 per barrel

West Texas Intermediate: DOWN 1.9 percent at $93.87 per barrel

London - FTSE 100: DOWN 0.3 percent at 10,275.72 points

Paris - CAC 40: DOWN 0.5 percent at 7,949.93

Frankfurt - DAX: DOWN 0.3 percent at 23,512.25

Tokyo - Nikkei 225: DOWN 1.2 percent at 53,819.61 (close)

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 25,465.60 (close)

Shanghai - Composite: DOWN 0.8 percent at 4,095.45 (close)

New York - Dow: DOWN 1.6 percent at 46,677.85 (close)

Euro/dollar: DOWN at $1.1464 from $1.1514 on Thursday

Pound/dollar: DOWN at $1.3260 from $1.3346

Dollar/yen: UP at 159.41 yen from 159.39 yen

Euro/pound: UP at 86.44 pence from 86.27 pence

burs-bcp/ajb/cw

T.Germann--VB