Volkswacht Bodensee - Stocks diverge, oil falls as traders weigh Iran, rates outlook

The European Central Bank is widely expected to raise interest rates later Thursday for the first time since 2023 after the Iran war send oil and gas prices soaring.

Investors will be watching ECB President Christine Lagarde's press conference closely for any clues about further tightening as the war drags on, choking off the Strait of Hormuz to Gulf cargo and tanker traffic.

The move would make the ECB the first of the world's major central banks to lift borrowing costs in response to the energy shock unleashed by the US-Israeli war against Iran.

A series of fresh strikes between the United States and Iran has kept sentiment on edge this week, despite a ceasefire agreed to in April.

Oil prices fell back Thursday after US Central Command said it had completed the latest strikes against Iran.

"Traders are digesting news that the flare-up in tensions in the Middle East could be over," said Kathleen Brooks, research director at trading group XTB.

"As the oil price falls, this is helping stocks recover after a sharp sell off on Wednesday," she added.

In Asian stocks trading, Tokyo edged higher, while Hong Kong and Shanghai declined.

That followed a weak session on Wall Street on Wednesday, where tech stocks again led declines after data showed a jump in US consumer inflation to a three-year high.

Attention turns to the Federal Reserve's policy meeting next week, with observers now suggesting a US rate increase could come before the end of the year.

The prospect of higher borrowing costs once again hurt tech firms, which tumbled on Wall Street.

Investors are also gearing up for the stock market debut of Elon Musk's SpaceX, expected to be the biggest in history when shares start trading on Friday.

"Given there's so much money riding on this... it could also influence broader market sentiment," said Susannah Streeter, chief investment strategist at Wealth Club.

"A stronger, more durable debut may boost confidence in high-growth technology companies," she said. "But a disappointing start could spark off another spurt of profit-taking across the sector" after huge gains since early this year.

- Key figures at around 1130 GMT -

London - FTSE 100: UP 0.9 percent at 10,345.98 points

Paris - CAC 40: UP 0.9 percent at 8,237.08

Frankfurt - DAX: UP 0.3 percent at 24,273.09

Tokyo - Nikkei 225: UP 0.1 percent at 64,217.27 (close)

Hong Kong - Hang Seng Index: DOWN 0.7 percent at 24,249.29 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,987.01 (close)

Brent North Sea Crude: DOWN 1.0 percent at $92.16 a barrel

West Texas Intermediate: DOWN 0.9 percent at $89.23 a barrel

Euro/dollar: DOWN at $1.1539 from $1.1545 on Wednesday

Pound/dollar: DOWN at $1.3366 from $1.3376

Dollar/yen: FLAT at 160.52 yen

Euro/pound: UP at 86.34 pence from 86.31 pence

T.Suter--VB