Volkswacht Bodensee - Oil down as traders weigh US sanctions threat against Iran

Treasury Secretary Scott Bessent said the White House was declaring an "economic D-Day" against Iran and threatened to hit its trade partners.

Talks to reopen the Strait of Hormuz have remained stalled for weeks, which had pushed oil prices up for most of August -- fuelling inflation fears and unnerving bond investors.

The US said expanded "secondary" sanctions would target Iran's digital assets, technology, gold, aviation and shipping sectors -- but gave no timeline and named no specific countries beyond Iran.

The measures appeared softer than analysts had expected, and were accompanied by news of further shuttle diplomacy as a key Pakistani mediator met with the Iranian president on Monday.

The news helped calm oil markets, with prices falling around three percent and the international benchmark Brent back below $90 a barrel.

The main US exchanges rose in early trading, matching earlier gains in Europe, though London slipped back into the red in the afternoon.

"European stock markets rebounded early Tuesday with some relief evident from the lack of any material increase in the economic pressure on Iran," said Neil Wilson, investor strategist at Saxo UK.

The positive performance of Europe's markets was further helped by German data showing the country's second-quarter growth was stronger than previously estimated.

Nvidia's earnings release on Wednesday is also keenly awaited as the chip giant's performance has become a key test of the AI boom, with concerns growing over whether the sector can match lofty expectations.

"The most actively traded stocks in the US right now are all the major AI names... this adds to evidence that Nvidia's results will be a key driver of price action, and potential volatility later this week," said Kathleen Brooks, research director at XTB trading group.

In Asia, tech-heavy Seoul rose, along with Tokyo and Shanghai, while the Hong Kong market was flat.

Investors are also looking to the annual Jackson Hole gathering of central bankers, economists and finance chiefs beginning Thursday, where Federal Reserve boss Kevin Warsh is due to speak.

His comments will be parsed for clues about monetary policy, with inflation still stubbornly high and after Bessent said the Treasury would buy back more of its own bonds to push down borrowing costs after the 30-year yield hit a 19-year high.

The move has weighed on the dollar and helped lift bitcoin briefly above $80,000 for the first time since May, with the prospect of crypto-friendly US legislation also providing support.

The Canadian dollar edged lower against the US dollar after US President Donald Trump vowed to double tariffs on Canadian vehicles, fanning a trade war.

Trump's threat comes after the neighbours failed to reach a deal to avert new 50 percent US tariffs on select Canadian goods. Canada is expected to announce Tuesday its response to the new levies.

- Key figures at around 1335 GMT -

Brent North Sea Crude: DOWN 2.8 percent at $88.00 per barrel

West Texas Intermediate: DOWN 3.0 percent at $82.45 per barrel

New York - DOW: UP 0.1 percent at 53,487.74 points

New York - S&P 500: UP 0.4 percent at 7,683.47

New York - Nasdaq: UP 0.7 percent at 26,164.05

London - FTSE 100: DOWN 0.1 percent at 10,879.24 points

Paris - CAC 40: UP 0.1 percent at 8,458.81

Frankfurt - DAX: UP 0.6 percent at 26,258.67

Tokyo - Nikkei 225: UP 0.5 percent at 65,856.43 (close)

Hong Kong - Hang Seng Index: FLAT at 25,511.10 (close)

Shanghai - Composite: UP 0.2 percent at 3,889.44 (close)

New York - DOW: UP 0.3 percent at 53,417.16 (close)

Euro/dollar: UP at $1.1665 from $1.1663

Pound/dollar: UP at $1.3630 from $1.3629

Euro/pound: DOWN at 85.56 pence from 85.57 pence

Dollar/yen: UP at 159.29 yen from 159.15 yen on Monday

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B.Baumann--VB