Volkswacht Bodensee - US stocks rally, oil prices fall as Trump calls off fresh Iran strikes

Trump jolted markets near 1730 GMT announcing he was calling off new attacks on Iran, while flagging a possible peace deal that he later claimed had been reached, calling the accord a "great settlement."

Those statements were enough to push oil prices more than two percent lower while major US indices rallied, with the broad-based S&P 500 ending up 1.8 percent.

Art Hogan of B. Riley Wealth Management welcomed the "better tone" from Trump, who had earlier in the day threatened to seize Iran's oil infrastructure following the latest military strikes between the countries.

But Hogan noted that Trump has repeatedly signaled an Iran deal as imminent in recent weeks without leading to anything concrete.

"The market would be up a lot more if it was verifiable," Hogan said.

Iran's Fars news agency, citing an unnamed source, said that Tehran has not yet approved a text for any deal with the United States.

"It's a funny situation where there's some real skepticism that there's a deal, even though the announcement's coming from the president of the United States himself," said Adam Button, a foreign exchange analyst at Investing Live.

"The market's waiting for some confirmation from Iran or someone else," Button said.

Earlier, the European Central Bank, as widely expected, raised interest rates for the first time since 2023 after the Iran war sent oil and gas prices soaring as the Strait of Hormuz was cut off to Gulf tanker traffic.

"The rate hike should be seen as an insurance move to reinforce the ECB's inflation fighting credibility, not as the beginning of an aggressive tightening cycle," said Stefan Gerlach, chief economist at EFG Bank in Zurich and a former deputy governor of Ireland's central bank.

The increase made 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.

The move comes as market watchers also see a rising chance the Federal Reserve will increase interest rates later this year in light of pricing pressures.

Data Thursday showed that US wholesale prices rose sharply in May, registering their highest 12-month increase in more than three years at 6.5 percent.

Month-on-month prices rose by 1.1 percent, which was higher than market expectations.

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

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 2020 GMT -

New York - Dow: UP 1.9 percent at 50,848.75 (close)

New York - S&P 500: UP 1.8 percent at 7,394.30 (close)

New York - Nasdaq Composite: UP 2.5 percent at 25,809.66 (close)

London - FTSE 100: UP 0.5 percent at 10,303.88 (close)

Paris - CAC 40: UP 0.5 percent at 8,200.80 (close)

Frankfurt - DAX: UP 0.1 percent at 24,209.71 (close)

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 2.9 percent at $90.38 a barrel

West Texas Intermediate: DOWN 2.6 percent at $87.71 a barrel

Euro/dollar: UP at $1.1579 from $1.1535 on Wednesday

Pound/dollar: UP at $1.3418 from $1.3368

Dollar/yen: DOWN at 159.78 yen from 160.55 yen

Euro/pound: UP at 86.29 pence from 86.28 pence

K.Sutter--VB