Volkswacht Bodensee - Crude extends gains, stocks drop as Trump considers latest Iran proposal

Investors were also gearing up for key central bank meetings and earnings reports from Wall Street giants this week.

Tehran was reported to have passed "written messages" to Washington via Pakistan spelling out its red lines in peace talks, including on its nuclear programme and the future of the crucial waterway.

The White House said the US president and his team met Monday to discuss the offer but spokeswoman Karoline Leavitt refused to say if Trump would accept the proposal.

Iran's proposed interim deal is said to see it reopen the Strait of Hormuz -- through which a fifth of oil and LNG usually flows -- in exchange for Washington ending its blockade of Iranian ports.

The plan also postpones more complex negotiations over its nuclear programme, a major sticking point for Trump.

Hopes for a deal had been rising going into last weekend but Trump dashed them on Saturday by scrapping a planned trip by his envoys Steve Witkoff and Jared Kushner to Islamabad.

Iran's envoy to the United Nations Amir Saeid Iravani told a Security Council session the country would first need guarantees Washington and Israel would not attack again if it was to offer security assurances in the Gulf.

But Secretary of State Marco Rubio said Iran's stance on the Strait of Hormuz did not meet US demands.

"If what they mean by opening the straits is, 'yes, the straits are open as long as you coordinate with Iran, get our permission or we'll blow you up and you pay us,' that's not opening the straits," Rubio told Fox News.

Meanwhile, President Vladimir Putin told Iran's Foreign Minister Abbas Araghchi that Russia would do everything it could to halt the Middle East war, as the two met in Saint Petersburg.

Oil prices jumped at least two percent to extend Tuesday's gains, with Brent heading back above $110 a barrel, while stock markets struggled.

Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Taipei, Mumbai, Bangkok, Manila and Wellington were all in the red, though Seoul rose again thanks to a resumption of the tech rally that has pushed the Kospi to a record high.

London, Paris and Frankfurt retreated at the open.

The losses came after the S&P 500 and Nasdaq once again hit record highs in New York.

IG analyst Tony Sycamore pointed out that Tehran could be more willing to strike a deal soon as its ageing storage facilities were expected to hit maximum capacity this week.

He added that "if forced shut‑ins follow, Tehran risks irreversible long‑term damage to its reservoirs and a serious hit to future production and revenue streams".

However he said that while Iran's latest offer was a positive, "it is hard to see the US accepting anything less than a comprehensive deal that both opens the Strait of Hormuz and addresses Iran's nuclear weapons programme".

The Bank of Japan sharply hiked its inflation forecasts for the current year and halved its growth projections owing to surging oil prices.

Officials also held off hiking interest rates again, having last done so in December, though observers pointed out a significant split in the decision that could mean they will rise before the end of the year. That boosted the yen against the dollar.

The Federal Reserve, European Central Bank and Bank of England are expected to follow suit amid growing concerns about a fresh spike in inflation caused by the surge in energy costs.

Tech giants Apple, Meta Platforms and Microsoft are also due to report, as are older industrial companies including Ford and ExxonMobil.

- Key figures at 0715 GMT -

West Texas Intermediate: UP 2.0 percent at $98.29 a barrel

Brent North Sea Crude: UP 2.3 percent at $110.71 a barrel

Tokyo - Nikkei 225: DOWN 1.0 percent at 59,917.46 (close)

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 25,661.31

Shanghai - Composite: DOWN 0.2 percent at 4,078.64 (close)

London - FTSE 100: DOWN 0.2 percent at 10,299.22

Euro/dollar: DOWN at $1.1700 from $1.1722 on Monday

Pound/dollar: DOWN at $1.3506 from $1.3534

Dollar/yen: DOWN at 159.20 yen from 159.39 yen

Euro/pound: DOWN at 86.57 pence from 86.61 pence

New York - Dow: DOWN 0.1 percent at 49,167.79 (close)

T.Germann--VB