San Francisco Frontiers - Stocks drop, oil jumps as Mideast war persists

Crude prices jumped further on Friday, with the international benchmark, Brent crude, rising 3.3 percent on Friday to nearly $112.19 per barrel. The main US contract, West Texas Intermediate, rose 2.3 percent to over $98 per barrel.

Angelo Kourkafas of Edward Jones, said this week's assaults on energy infrastructure deepened the market's concerns.

"What really matters more is not how high prices are now, but how long prices may stay high, and I think it's that uncertainty that is triggering the volatility," he said.

Coming into this week, investors were anxious over the near-closure of the Strait of Hormuz, through which about 20 percent of the world's crude oil and liquefied natural gas flow.

Early Friday, drone attacks caused fire at Kuwait's Mina Al-Ahmadi oil refinery.

Energy analysts and consumers are also scrambling to count the cost of Iranian missiles hitting Qatar's huge Ras Laffan natural gas complex on Thursday.

The attack caused "extensive damage" that Qatar's state energy company said could cost $20 billion a year in lost revenue and take five years to repair.

"Heading into a weekend, investors are unsurprisingly a bit nervous about what may happen, of course nobody knows how it's going to play out," said Kourkafas, who pointed to the rise in government bond yields as a sign markets are more worried about inflation.

All three major US indices finished lower Friday, with the broad-based S&P 500 losing 1.5 percent.

US Federal Reserve Governor Christopher Waller on Friday expressed concern about inflation in light of the war.

Waller, who has since last year backed interest rate cuts over labor market concerns, said he changed his mind in the last two weeks on the pace of easing due to inflation risks.

"Since that time the Strait of Hormuz was closed, this is looking like it's going to be a much more protracted conflict, and oil prices are going to stay high for a longer time," he told US broadcaster CNBC on Friday.

"So that suggested inflation was more of a concern than I was putting it."

Earlier, European markets ended the day lower, with London's FTSE 100 sliding below the 10,000 level for the first time since early January as bond concerns mounted.

On Thursday, US markets had been buoyed by comments from Israeli Prime Minister Benjamin Netanyahu that the war could end sooner than expected.

But Iran's supreme leader Ayatollah Mojtaba Khamenei remained defiant on Friday, saying that Iranians had dealt a "dizzying blow" to the country's enemies.

Also Friday, US President Donald Trump ruled out reaching a ceasefire agreement with Iran, saying Washington has the upper hand in the three-week-old war.

"I don't want to do a ceasefire. You know you don't do a ceasefire when you're literally obliterating the other side," Trump told journalists at the White House.

- Key figures at around 2015 GMT -

Brent North Sea Crude: UP 3.3 percent at $112.19 per barrel

West Texas Intermediate: UP 2.3 percent at $98.32 per barrel

New York - Dow: DOWN 1.0 percent at 45,577.47 (close)

New York - S&P 500: DOWN 1.5 percent at 6,506.48 (close)

New York - Nasdaq Composite: DOWN 2.0 percent at 21,647.61 (close)

London - FTSE 100: DOWN 1.4 percent at 9,918.33 (close)

Paris - CAC 40: DOWN 1.8 percent at 7,665.62 (close)

Frankfurt - DAX: DOWN 2.0 percent at 22,380.19 (close)

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 25,277.32 (close)

Shanghai - Composite: DOWN 1.2 percent at 3,957.05 (close)

Tokyo - Nikkei 225: Closed for a holiday

Euro/dollar: DOWN at $1.1550 from $1.1589 on Thursday

Pound/dollar: DOWN at $1.3323 from $1.3257

Dollar/yen: DOWN at 159.30 yen from 159.86 yen

Euro/pound: UP at 86.68 pence from 86.38 pence

burs-jmb/sms

N.Wilson--SFF