Volkswacht Bodensee - Oil prices tumble, stocks rally on Mideast peace hopes

After nearly four weeks of conflict, investors jumped on signs that hostilities could be winding down, with the safe-haven dollar losing support.

However, analysts pointed out that the arrival of more US troops in the Middle East and fresh missile strikes exchanged between Iran and Israel suggested chances of escalation remained.

"Oil prices have moved lower... offering some relief to equities that had been weighed down by worries over inflation," noted Matt Britzman, senior equity analyst at Hargreaves Lansdown.

"It's still a highly fluid situation. Trying to call how the rest of the week plays out would be unwise."

The economic impact of the crisis has begun to bite around the world, with governments looking to cut energy consumption.

Helping to ease the situation, Tehran announced it will let "non-hostile" oil vessels through the crucial Strait of Hormuz.

Crude futures plunged more than six percent Wednesday -- with Brent back below $100 -- after US President Donald Trump voiced optimism at ending the war and said officials were "in negotiations right now".

The head of the International Energy Agency, Fatih Birol, meanwhile said he was "ready to move forward" with an additional release of oil reserves "if and when necessary".

In stock markets trading, European indices jumped around 1.5 percent approaching the half-way stage Wednesday.

Asian markets earlier closed with strong gains, led by Tokyo which won nearly three percent.

- 'Buying on dip' -

"European markets are following the wider global theme of optimism as rumours swirl around the apparent negotiations that could lead us out of the conflict in Iran," said Joshua Mahony, chief market analyst at Scope Markets.

"Dip buyers have started to grab what they can, while oil prices shift lower as the perceived length of time associated with the disruption shortens."

European Central Bank chief Christine Lagarde said the ECB has several options for dealing with the energy shock, vowing policymakers would not be "paralysed by hesitation".

At its most recent meeting last week, the ECB kept interest rates on hold, while warning of higher inflation and lower growth in the eurozone owing to the war.

However, analysts have raised bets on the central bank hiking borrowing costs as soon as next month to try and keep the lid on an expected surge in consumer prices.

Hopes of an end to the Middle East conflict surfaced after the New York Times quoted unnamed officials saying that Washington had sent a 15-point peace proposal via Pakistan.

Israel's Channel 12 said that Trump was suggesting a one-month ceasefire during which they would discuss handing over Iran's enriched uranium and banning further enrichment.

The Israeli report added that Tehran would ensure safe passage through the Strait of Hormuz, while Iran would see an end to all sanctions and receive assistance in developing civil nuclear energy.

The strait, through which one fifth of global oil and gas normally flows, has largely been blockaded by Iran.

Away from the war and in a boost to the aviation sector hit by higher jet fuel costs, European planemaker Airbus has struck a $15.8-billion deal to provide China Eastern Airlines with 101 single-aisle passenger planes.

Airbus shares rose 1.5 percent in Paris midday deals.

- Key figures at around 1045 GMT -

Brent North Sea Crude: DOWN 5.5 percent at $94.75 a barrel

West Texas Intermediate: DOWN 5.4 percent at $87.35 a barrel

London - FTSE 100: UP 1.2 percent at 10,080.29 points

Paris - CAC 40: UP 1.6 percent at 7,865.90

Frankfurt - DAX: UP 1.6 percent at 22,995.19

Tokyo - Nikkei 225: UP 2.9 percent at 53,749.62 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 25,335.95 (close)

Shanghai - Composite: UP 1.3 percent at 3,931.84 (close)

New York - Dow: DOWN 0.2 percent at 46,124.06 (close)

Euro/dollar: UP at $1.1602 from $1.1583 on Tuesday

Pound/dollar: UP at $1.3409 from $1.3381

Dollar/yen: DOWN at 158.93 yen from 159.03 yen

Euro/pound: DOWN at 86.54 pence from 86.57 pence

burs-bcp/ajb/rl

D.Schaer--VB