Sawt Falasteen - Geopolitical tensions buffet markets as gold hits record

Wall Street resumed a downward slide after two up days, but European stocks rose as German lawmakers approved a massive spending boost for defense and infrastructure.

Gold struck a new record high on fears of escalating tensions in the Middle East after Israel launched its most intense strikes on Gaza since a ceasefire with Hamas took effect.

"It is clear that safe haven demand is one of the major drivers behind this gold rally and with the Middle East tensions rising again," said City Index and FOREX.com analyst Fawad Razaqzada.

US President Donald Trump's talks with Russian President Vladimir Putin failed to yield a ceasefire, prompting Ukrainian President Volodymyr Zelensky to pledge continued fighting in Russia's Kursk region.

Major US indices spent the entire session in the red on the first day of a two-day Federal Reserve meeting.

"The news of what's going on politically, it's still very uncertain," said Tom Cahill of Ventura Wealth Management. "I don't think there's any new news so far this week that should make the market feel more encouraged."

But Frankfurt's DAX stocks index touched a new all-time high ahead of the German government's response to concerns over the United States' wavering commitment to European defense.

Germany's unprecedented fiscal package -- dubbed an "XXL-sized" cash "bazooka" by German media -- could pave the way for more than one trillion euros (dollars) in spending over the next decade in Europe's top economy.

The historic parliament vote signaled a radical departure for a country famously reluctant to take on large state debt -- or to spend heavily on the armed forces, given its dark World War II history.

"International investors, who have increasingly invested in German stocks over the past few months, are hopeful for a significant boost in fiscal policy," said Jochen Stanzl, chief market analyst at trading group CMC Markets.

Paris and London's stock markets also advanced.

Markets have swung sharply following announcements by Trump on the imposition of tariffs on US trading partners and any delays to the measures.

Investors are eyeing this week's policy decisions from the Fed, Bank of Japan and Bank of England, with all three forecast to stand pat on interest rates.

Asian markets rallied on Tuesday following Monday's positive day on Wall Street stoked by US data that tempered concerns about a possible recession.

Hong Kong led gains thanks to further buying of Chinese tech firms including Alibaba, Tencent and JD.com.

Electric vehicle maker BYD was also a big winner, adding more than four percent -- having jumped more than six percent to a record at one point -- after unveiling battery technology it says can charge in five minutes.

Nvidia fell 3.4 percent as chief executive Jensen Huang showcased cutting-edge chips for artificial intelligence at the company's annual developers conference.

Google parent Alphabet fell 2.3 percent after the tech giant announced it will acquire cloud security platform Wiz for $32 billion, as it seeks to beef up its cloud computing business for the AI era.

- Key figures around 2030 GMT -

New York - Dow: DOWN 0.6 percent at 41,581.31 (close)

New York - S&P 500: DOWN 1.1 percent at 5,614.66 (close)

New York - Nasdaq Composite: DOWN 1.7 percent at 17,504.12 (close)

London - FTSE 100: UP 0.3 percent at 8,705.23 (close)

Paris - CAC 40: UP 0.5 percent at 8,114.57 (close)

Frankfurt - DAX: UP 1.0 percent at 23,380.70 (close)

Tokyo - Nikkei 225: UP 1.2 percent at 37,845.42 (close)

Hong Kong - Hang Seng Index: UP 2.5 percent at 24,740.57 (close)

Shanghai - Composite: UP 0.1 percent at 3,429.76 (close)

Euro/dollar: UP at $1.0944 from $1.0922 on Monday

Pound/dollar: UP at 1.3003 from $1.2992

Dollar/yen: UP at 149.36 yen from 149.21 yen

Euro/pound: UP at 84.16 pence from 84.07 pence

Brent North Sea Crude: DOWN 0.7 percent at $70.56 per barrel

West Texas Intermediate: DOWN 1.0 percent at $66.90 per barrel

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R.Halabi--SF-PST