Volkswacht Bodensee - Oil and stocks both steady as US-Iran peace talks approach

Oil prices had tumbled in recent days as optimism grew there would be a lasting Middle East peace agreement, which would mean supplies would be back on track -- but investors took a breather on Wednesday and crude had edged marginally up by the time US markets opened.

"The collapse in oil has changed the tone of global markets, supporting bonds (prices) and reducing near-term inflation pressure," noted Tickmill market strategist Patrick Munnelly.

"But it has not produced a clean equity rally because AI valuations remain under scrutiny and central banks are not ready to fully reverse their caution."

Attention is turning to Friday's official Mideast peace signing ceremony in Switzerland and the subsequent negotiations that will focus on the fate of Tehran's nuclear programme and a plan for lifting international economic sanctions.

US President Donald Trump has said the Strait of Hormuz -- through which a fifth of global crude usually passes -- would "completely open" once the deal is signed.

Oil industry experts and shipping companies have warned that it will take time to restore normal operations after the waterway's near shutdown.

Crude inventories held by OECD member countries fell in May to the lowest level since 1990 as governments drew down stocks to offset the blockage of Gulf crude shipments during the Middle East war, the International Energy Agency said Wednesday.

The drawdown since the start of the conflict has reached 163 million barrels in the Organisation for Economic Cooperation and Development club of wealthy countries, the IEA said in its monthly report.

Elsewhere on Wednesday, the dollar was mixed ahead of the US Federal Reserve's first policy announcement under new Trump-appointed boss Kevin Warsh.

While expectations are for the Fed to stick with the current interest rates, investors will be keeping a close eye on its post-meeting statement for an idea about the policy committee's thinking in light of surging inflation and a strong jobs market.

Data last week showed US consumer prices rose in May at their highest level for three years owing to the impact of surging oil costs caused by the war.

Some observers predict the Fed will eventually announce a rates increase before the end of the year, despite Trump's previous demands for cuts.

"With spending still resilient and the labour market holding firm, inflation will be a top focus as investors lock in on the committee's projections and incoming Fed Chair Warsh's remarks," said eToro's  US investment analyst Bret Kenwell.

"The big question is whether renewed rate-hike concerns will cool off a rally that has recently started to reheat."

- Key figures around 1330 GMT -

Brent North Sea Crude: UP one percent at $79.74 a barrel

West Texas Intermediate: UP 0.9 percent at $75.97 a barrel

New York - Dow: UP 0.1 percent at 52,069.66 points

New York - S&P 500: UP 0.1 percent at 7,517.72

New York - Nasdaq: UP 0.3 percent at 26,449.88

London - FTSE 100: DOWN 0.2 percent at 10,471.89 points

Paris - CAC 40: UP 0.1 percent at 8,452.39

Frankfurt - DAX: DOWN 0.2 percent at 24,865.53

Tokyo - Nikkei 225: UP 0.7 percent at 69,902.25 (close)

Hong Kong - Hang Seng Index: DOWN 0.7 percent at 24,312.16 (close)

Shanghai - Composite: UP 0.4 percent at 4,108.08 (close)

Euro/dollar: DOWN at $1.1602 from $1.1608 on Tuesday

Pound/dollar: DOWN at $1.3416 from $1.3427

Dollar/yen: DOWN at 160.26 yen from 160.45 yen

Euro/pound: UP at 86.49 pence from 86.45 pence

burs-jxb/kjm

L.Stucki--VB