San Francisco Frontiers - Oil price gains ease after Iran points to mediation

Stock markets traded mixed as investors kept a close eye on war developments alongside lingering concerns that the AI sector may be overbought.

The British pound climbed against the dollar and euro, with the UK to confirm Monday that Andy Burnham is the nation's new prime minister, ahead of him likely appointing a new finance minister.

"Political change is a lot for investors to digest, but they've got more on their plate," noted Russ Mould, investment director at AJ Bell.

"The Iran war has escalated and driven oil prices back above $90 a barrel. That means inflation fears are back on the table."

Crude futures surged over the past week as Washington and Tehran traded fire, raising fears of a sustained disruption in the Strait of Hormuz, through which around one fifth of the world's oil normally passes.

The benchmark international crude contract, Brent North Sea, rose above $91 a barrel Monday, its highest price since June 11, before giving up much of the gain.

This after Iran indicated that diplomacy with Washington was continuing through mediators, even as it struck Gulf targets and was targeted by US strikes.

"We have received messages -- without going into details -- but the main point is that the diplomatic apparatus has been active in recent days and ideas have been conveyed to us by certain mediators," Iranian foreign ministry spokesman Esmaeil Baghaei told a news conference in Tehran.

Higher crude prices have revived concerns that inflation could remain elevated and complicate the path to lower interest rates, but some analysts argue the broader economic backdrop is becoming more supportive.

"Markets are once again being forced to trade two seemingly contradictory stories on the same screen," said Stephen Innes of SPI Asset Management.

While the renewed rise in oil prices has injected a fresh geopolitical risk premium into markets, he said cooling underlying US inflation and a softer American labour market suggested the energy shock would not necessarily trigger a new cycle of broad-based inflation.

Instead, the biggest risk would come if elevated oil prices persist long enough to erode household spending and weigh on economic growth.

Ahead of the Wall Street open, US aircraft maker Boeing said at the start of the Farnborough airshow that it had received an order for 100 of its single-aisle 737 MAX jets from leasing company SMBC Aviation Capital.

- Key figures around 1100 GMT -

Brent North Sea Crude: UP 0.6 percent at $88.59 per barrel

West Texas Intermediate: FLAT at $82.47 per barrel

London - FTSE 100: DOWN 0.6 percent at 10,542.30 points

Paris - CAC 40: UP 0.1 percent at 8,343.32

Frankfurt - DAX: FLAT at 24,832.99

Tokyo – Nikkei 225: Closed for a holiday

Hong Kong – Hang Seng Index: UP 2.4 percent at 25,143.05 (close)

Shanghai – Composite: UP 0.9 percent at 3,796.28 (close)

New York – Dow: DOWN 0.8 percent at 52,146.42 (close)

Pound/dollar: UP $1.3468 at from $1.3457 on Friday

Euro/pound: DOWN at 84.88 from 85.00 pence

Euro/dollar: DOWN at $1.1432 from $1.1439

Dollar/yen: DOWN at 162.39 yen from 162.44 yen

W.Thompson--SFF