San Francisco Frontiers - Oil rallies, stocks mostly retreat on Middle East tensions

The dollar gained, helped by its haven status and the outlook for global interest rates, with the British pound sinking more than one percent against the US unit as Bank of England chief Andrew Bailey hinted at faster cuts to UK borrowing costs.

Sterling's drop helped lift London's FTSE 100 share index featuring multinationals earnings in dollars, such as Shell and BP, whose shares were rising also thanks to higher oil futures.

Paris and Frankfurt dropped, however, in midday deals.

In Asia, Tokyo closed 2.0-percent higher as the yen came off the boil.

Hong Kong fell for the first time in more than a week after a blistering surge fuelled by China's bold steps to stimulate its weak economy.

"Markets are in a state of suspense, bracing for Israel's anticipated retaliation against Iran -- a move that could catapult oil prices skyward," noted independent markets analyst Stephen Innes.

"Brent crude has settled around $75 a barrel for now, but any military strike, particularly one targeting Iran's oil or nuclear infrastructure, could trigger a significant spike."

Israel on Thursday carried out a deadly air raid in central Beirut after eight ground troops were killed near the Lebanese border, as it traded threats with its arch foe Iran over possible future attacks.

The Israeli military kept up its bombardment of the Lebanese capital after Iran launched its largest missile attack yet on Israel, which prompted Prime Minister Benjamin Netanyahu to warn Tehran would pay for its "big mistake".

As Israel weighs retaliation, President Joe Biden said the United States was "fully supportive" of its ally but ruled out supporting a strike on Iran's nuclear sites.

Iran, which backs Lebanese militant group Hezbollah, said it would step up its response if Israel counterattacked, defying calls for de-escalation in a war that has cost more than 1,000 lives in Lebanon.

Wall Street saw a steady performance Wednesday, with investors awaiting key US jobs data Friday.

- Key figures around 1045 GMT -

Brent North Sea Crude: UP 2.0 percent at $75.36 per barrel

West Texas Intermediate: UP 2.2 percent at $71.62 per barrel

London - FTSE 100: UP 0.3 percent at 8,312.96 points

Paris - CAC 40: DOWN 0.7 percent at 7,522.05

Frankfurt - DAX: DOWN 0.5 percent at 19,067.90

Tokyo - Nikkei 225: UP 2.0 percent at 38,552.06 (close)

Hong Kong - Hang Seng Index: DOWN 1.5 percent at 22,113.51 (close)

Shanghai - Composite: Closed for a holiday

New York - Dow: UP 0.1 percent at 42,196.52 (close)

Pound/dollar: DOWN at $1.3118 from $1.3266 on Wednesday

Euro/dollar: DOWN at $1.1034 from $1.1048

Euro/pound: UP at 84.15 pence from 83.26 pence

Dollar/yen: UNCHANGED at 146.83 yen

burs-bcp/ajb/cw

M.Hill--SFF