Volkswacht Bodensee - Oil jumps, stocks drop as Mideast war prolongs market volatility

Crude futures fluctuated between gains of around two and six percent as the release of oil reserves by some countries helped to offset news of attacks on commercial ships in the Gulf.

"Oil prices remain volatile and risk sentiment fragile and trading is on the headlines and rapidly evolving conflict in the Middle East," noted Neil Wilson, Saxo UK investor strategist.

Europe's leading stock markets retreated close to one percent nearing the half-way stage, after Asian indices mostly closed lower.

However, Tokyo and Seoul, which have seen the widest swings since the crisis unfolded, both finished more than one percent higher.

Financial markets have experienced huge volatility since the United States and Israel began striking Iran at the end of last month.

Tehran has retaliated by attacking targets across the oil-rich Gulf and effectively shutting down the crucial Strait of Hormuz, through which nearly 20 percent of the world's oil usually transits to world markets.

Fears that the conflict could drag on for some time -- choking off energy supplies -- sent both main crude contracts soaring on Monday to within a whisker of $120 a barrel, the highest since 2022. Gas prices also rocketed.

However, prices tanked on Tuesday after US President Donald Trump said the war on Iran was "going to be ended soon".

"Markets are likely to grow increasingly fearful over the long-term implications with each day that passes," said Joshua Mahony, chief market analyst at Scope Markets.

"Oil prices remain the main driver of market sentiment," he added.

Certain countries' plans to release part of their strategic oil reserves "are undoubtedly part of a highly coordinated strategy", France's Finance Minister Roland Lescure said on Wednesday.

Japan and Germany each announced that they plan to tap into their oil reserves to counter high energy prices, which are boosting share valuations for fossil fuel majors.

German arms maker Rheinmetall meanwhile said that the Middle East war offered new business opportunities, especially for its air defence systems, as it forecast continued strong growth this year.

New attacks hit three commercial ships in the Gulf on Wednesday, officials said, with one of the vessels in flames as Iran pressed its campaign against its oil-exporting neighbours.

- Key figures at around 1145 GMT -

Brent North Sea Crude: UP 4.2 percent at $91.50 per barrel

West Texas Intermediate: UP 4.3 percent at $87.03 per barrel

London - FTSE 100: DOWN 0.8 percent at 10,335.00 points

Paris - CAC 40: DOWN 0.7 percent at 8,004.60

Frankfurt - DAX: DOWN 1.2 percent at 23,671.79

Tokyo - Nikkei 225: UP 1.4 percent at 55,025.37 (close)

Hong Kong - Hang Seng Index: DOWN 0.2 at 25,898.76 (close)

Shanghai - Composite: UP 0.3 percent at 4,133.43 (close)

New York - Dow: DOWN 0.1 percent at 47,706.51 (close)

Euro/dollar: DOWN at $1.1604 from $1.1612 on Tuesday

Pound/dollar: UP at $1.3433 from $1.3415

Dollar/yen: UP at 158.45 yen from 158.06 yen

Euro/pound: DOWN at 86.39 pence from 86.48 pence

burs-bcp/ajb/rlp

O.Schlaepfer--VB