Volkswacht Bodensee - Oil jumps on Iran war tensions, offsetting bond yield fears

The US Treasury said it would "at least double" its sovereign bond buybacks to curb borrowing costs, after yields surged to near two-decade highs on concerns over inflation, government borrowing and possible interest rate hikes.

The announcement triggered a rebound on Asian markets, with technology stocks recovering from worries about huge AI spending, while the dollar weakened further.

European stocks, however, "didn't directly benefit as much from the US Treasury announcement, and were more exposed to the latest gain in energy prices," said Deutsche Bank's Jim Reid.

London, Paris and Frankfurt were all lower in midday trading Thursday.

Oil prices jumped around 2.5 percent as peace talks between the US and Iran remained stalled, with Tehran keeping the key Strait of Hormuz shut and Washington persisting with a naval counter-blockade of Iran.

US President Donald Trump pledged "economic warfare" against Tehran and threatened any country that trades with it, further dimming hopes of an imminent deal to end nearly six months of war in the Gulf.

In Asia, stocks rallied thanks to strong showings on Wednesday by market titans Apple, Microsoft and Amazon.

Seoul soared nearly six percent as chipmaker SK hynix rocketed 12.7 percent, helped by the firm announcing a $29 billion share buyback, and Samsung climbed more than nine percent.

Tech firms also helped Tokyo more than one percent higher, while Hong Kong and Shanghai were also well up.

"The key question now is whether the fall in yields can last," said City Index's Fiona Cincotta, referring to government bond yields that have soared across major Western economies in recent sessions.

"If oil prices remain elevated and concerns over US borrowing continue, pressure on the long end of the Treasury curve could return," she said.

Meanwhile, minutes from the Federal Reserve's July meeting showed that many policymakers believe higher interest rates will be necessary if inflation does not decline.

Eyes are now on next week's annual meeting of central bankers, economists and finance chiefs in Jackson Hole, Wyoming, where investors will be hoping for some idea about Fed boss Kevin Warsh's thinking on the outlook for rates.

In company news, the founder of Chinese property giant Evergrande, Xu Jiayin, was jailed for life Thursday and the group fined more than $2 billion after a high-profile default in 2021.

Shares in the British sports retail group JD Sports plunged 14 percent in London after cutting its annual profit forecast, as it was hit by sluggish sales in North America.

- Key figures at around 1030 GMT -

Brent North Sea Crude: UP 2.5 percent at $93.91 per barrel

West Texas Intermediate: UP 2.5 percent at $88.01 per barrel

London - FTSE 100: DOWN 0.3 percent at 10,712.00 points

Paris - CAC 40: DOWN 0.4 percent at 8,468.15

Frankfurt - DAX: DOWN 0.5 percent at 25,957.81

Tokyo - Nikkei 225: UP 1.4 percent at 66,216.79 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 25,698.49 (close)

Shanghai - Composite: UP 0.2 percent at 3,903.72 (close)

New York - DOW: UP 0.2 percent at 53,463.05 (close)

Dollar/yen: UP at 158.32 yen from 158.27 yen on Wednesday

Euro/dollar: UP at $1.1704 from $1.1672

Pound/dollar: UP at $1.3651 from $1.3605

Euro/pound: DOWN at 85.74 pence from 85.80 pence

dan-ajb/js

K.Sutter--VB