Volkswacht Bodensee - Stocks rally, oil slides on Mideast deal hopes

US President Donald Trump claimed an agreement could be signed in days as he cancelled threatened strikes on Thursday, although Iran's position remained unclear.

Iran's foreign ministry spokesman Esmaeil Baqaei said Tehran "had not reached a final conclusion on the agreement".

The country's state media said that under a draft agreement with the United States, Tehran would not give up control over the strategic Strait of Hormuz.

In Europe, Paris and Frankfurt stock markets rose more than 1.5 percent, while London was one percent higher, following big gains in Asia.

"Investors were in a buoyant mood as hopes of a peace deal between the US and Iran were revived, having seemingly dropped off the table earlier in the week," said Dan Coatsworth, head of markets at AJ Bell.

"Whether momentum can be sustained depends on positive noises about a resolution translating into something more solid in the coming days," he added.

World oil prices tumbled, with international benchmark Brent crude down more than three percent at $87 a barrel.

"Oil markets may be breathing a little easier, but the path back to smoother flows could take us into the latter part of the year," said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

"Even if a deal is reached, getting supply back to normal will not be as simple as flicking a switch, with mines in the Strait of Hormuz to clear, idled production fields to restart, and damaged energy infrastructure to repair," he said.

The mood on equity markets was also buoyant ahead of the market debut later Friday of Elon Musk's SpaceX, the biggest initial public offering in history.

The $75-billion share sale puts SpaceX among Wall Street's 10 biggest companies with a valuation of just under $1.8 trillion -- ahead of Tesla, Facebook owner Meta, and Walmart.

Japan's Nikkei on Friday closed up almost three percent while Seoul's chip-heavy Kospi gave back earlier gains to end the day more than four percent higher.

The Hang Seng and Shanghai also rallied.

The European Central Bank raised interest rates on Thursday for the first time since 2023, after the Iran war sent oil and gas prices soaring.

Investors expect the Federal Reserve to also increase US interest rates this year.

The Bank of Japan and the Bank of England meet next week.

- Key figures around 1100 GMT -

Brent North Sea Crude: DOWN 3.2 percent at $87.51 a barrel

West Texas Intermediate: DOWN 3.2 percent at $84.88 a barrel

London - FTSE 100: UP 1.1 percent at 10,414.83 points

Paris - CAC 40: UP 1.8 percent at 8,348.44

Frankfurt - DAX: UP 1.6 percent at 24,584.93

Tokyo - Nikkei 225: UP 2.8 percent at 66,020.04 (close)

Hong Kong - Hang Seng Index: UP 1.9 percent at 24,718.10 (close)

Shanghai - Composite: UP 1.1 percent at 4,031.51 (close)

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

Euro/dollar: FLAT at $1.1579 from $1.1579 on Thursday

Pound/dollar: DOWN at $1.3416 from $1.3418

Dollar/yen: UP at 160.10 yen from 159.78 yen

Euro/pound: FLAT at 86.29 pence from 86.29 pence

R.Kloeti--VB