Volkswacht Bodensee - Stocks rally on optimism over Iran war ceasefire, oil extends gains

Washington and Tehran's announcement Tuesday of a two-week truce that would see the Strait of Hormuz reopened, having been closed since the start of the war, sparked a wave of euphoria across markets.

But hopes for an end to the crisis have been hit by squabbles between the two sides over the agreement and the future of the key waterway, through which a fifth of the world's oil and gas passes.

US and Iranian delegations are due in Pakistan for peace talks, but they come as Tehran says Israel has already broken terms of the ceasefire by continuing to hit Lebanese targets, where Israel says Iran-backed Hezbollah is located.

The United States and Israel deny an end to attacks on Lebanon was in the deal.

Meanwhile, Trump warned on Thursday against Iran's plan to charge a toll for ships passing through Hormuz, saying on social media : "They better not be and, if they are, they better stop now!"

In a second message just a few minutes later, he added that "very quickly, you'll see Oil start flowing, with or without the help of Iran."

He also said Tehran was "doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz".

Just 10 vessels have passed through the waterway since the Middle East war ceasefire took effect, according to maritime tracking data.

Only one of those tankers is not Iranian.

Equity markets, which have been hammered since the war broke out on February 28, extended the week's gains.

Tokyo, Hong Kong, Seoul, Shanghai and Taipei all rose at least one percent, while Singapore and Manila were also well up, though Sydney slipped.

The gains followed a second healthy run-up on Wall Street.

Oil prices climbed around one percent but sat just below $100 a barrel. West Texas Intermediate briefly jumped above the key level on Thursday.

Analysts said the equity gains were helped by news that Israel and Lebanon will hold talks next week in Washington.

That comes after NBC reported that Trump had asked Israeli Prime Minister Benjamin Netanyahu for a scale-back in strikes on its northern neighbour to ensure the success of negotiations with Iran.

With stocks rising, IG market analyst Fabien Yip said those "that suffered the deepest drawdowns during the conflict are likely candidates for the sharpest near-term recovery".

But she warned: "The ceasefire is temporary and the details remain sparse. Iran's 10-point proposal and Washington's stated positions retain substantial differences, and the Islamabad talks carry no guarantee of success.

"Even the reopening of the Strait of Hormuz -- subject to Iran's 'technical limitations' -- will take weeks, if not months, before shipping backlogs are cleared and supply chains normalise.

"Crude oil prices are therefore unlikely to revert to pre-war levels in the near term."

Investors are also keeping tabs on the release later Friday of US inflation data, which observers say could provide an idea about the impact of the surge in crude on consumers.

Prices are expected to have spiked 3.4 percent last month, from 2.4 percent in February, according to a Bloomberg survey.

In company news, shares in Japanese retail titan Fast Retailing soared 10 percent to a record high after it hiked its full-year operating profit outlook, helped by healthy demand for its Uniqlo brand in the United States and Europe.

- Key figures at around 0230 GMT -

West Texas Intermediate: UP 0.8 percent at $98.67 a barrel

Brent North Sea Crude: UP 0.6 percent at $96.51 a barrel

Tokyo - Nikkei 225: UP 1.5 percent at 56,728.95 (break)

Hong Kong - Hang Seng Index: UP 1.1 percent at 26,029.69

Shanghai - Composite: UP 1.0 percent at 4,006.68

Euro/dollar: DOWN at $1.1692 from $1.1707 on Thursday

Pound/dollar: DOWN at $1.3428 from $1.3441

Dollar/yen: UP at 159.08 yen from 159.06 yen

Euro/pound: DOWN at 87.07 pence from 87.09 pence

New York - Dow Jones: UP 0.6 percent at 48,185.80 (close)

London - FTSE 100: DOWN 0.1 percent at 10,603.48 (close)

E.Gasser--VB