Sawt Falasteen - Stocks firm, oil dips after sell-off on Middle East turmoil

Markets were roiled the previous two days as the conflict between the United States and Iran had effectively closed shipping through the narrow Strait of Hormuz through which a fifth of the world's crude oil travels as well as considerable liquefied natural gas (LNG) supplies.

That sent crude and gas prices spiking higher, triggering fears that inflation could strangle economic growth.

President Donald Trump sought to allay concerns about oil supply being choked off on Tuesday, saying the US Navy was ready to escort oil tankers and that the United States would offer shippers insurance.

"That announcement tempered the spike in oil prices that has persisted today," said Briefing.com analyst Patrick O'Hare.

Brent crude, the international reference contract for oil, was down nearly one percent.

Wall Street's three main stock indices rose as trading got underway in New York.

Trading platform XTB's research director Kathleen Brooks said that headlines helped shift sentiment.

"Hopes are high that the conflict in the Middle East might be short lived, after a newspaper report that Iran contacted the US over the weekend about ending the war," she said, referring to a report in the New York Times.

Financial markets are trying to adjust to the new uncertainty in Iran and the Middle East.

"While markets were extremely sensitive to downside risk earlier this week, they are also sensitive to upside risks," said Brooks.

"The merest whiff that a resolution to the conflict is on the cards is helping European stocks to rebound," she added.

In European afternoon trading, London was up 0.9 percent, Paris 1.1 percent and Frankfurt 1.5 percent.

The gains followed steep losses across Asian stock markets, as the region is heavily dependent upon Middle East oil and gas supplies.

Iran's Revolutionary Guards claimed "complete control" of the Strait of Hormuz, with reports of additional vessels in the vital waterway coming under attack on Wednesday.

Seoul led losses in Asia as the Kospi tanked more than 12 percent, suffering its worst two-day collapse since the 2008 financial crisis, with trading briefly halted.

Chung Hae-chang, analyst at Daishin Securities, said: "Because South Korea, Japan, China and Taiwan rely heavily on energy shipments that pass through the Strait, any blockage would have significant negative effects on the market."

Japan's Nikkei 225 ended off more than three percent, with chipmakers Advantest and Tokyo Electron losing more than four percent.

Elsewhere in Asia, Taipei sank more than four percent. Bangkok tumbled eight percent to also spark a brief trading halt.

Hong Kong, Sydney, Singapore, Shanghai, Wellington, Mumbai, Manila and Jakarta were also deep in negative territory.

The Dubai and Abu Dhabi stock exchanges dropped on Wednesday after a two-day trading suspension over Iran's missile and drone attacks across the Gulf.

The Dubai bourse was down more than four percent and Abu Dhabi's ADX was around two percent lower.

- Key figures at around 1430 GMT -

New York - Dow: UP 0.4 percent at 48,684.43 points

New York - S&P 500: UP 0.3 percent at 6,835.52

New York - Nasdaq Composite: UP 0.5 percent at 22,627.11

London - FTSE 100: UP 0.9 percent at 10,578.02

Paris - CAC 40: UP 1.1 percent at 8,190.13

Frankfurt - DAX: UP 1.5 percent at 24,151.04

Seoul - Kospi: DOWN 12.1 percent at 5,093.54 (close)

Tokyo - Nikkei 225: DOWN 3.6 percent at 54,245.54 (close)

Hong Kong - Hang Seng Index: DOWN 2.0 percent at 25,249.48 (close)

Shanghai - Composite: DOWN 1.0 percent at 4,082.47 (close)

Euro/dollar: UP at $1.1637 from $1.1617 on Tuesday

Pound/dollar: UP at $1.3374 from $1.3358

Dollar/yen: DOWN at 157.28 yen from 157.59 yen

Euro/pound: UP at 87.01 pence from 86.98 pence

West Texas Intermediate: DOWN 1.1 percent at $73.77 per barrel

Brent North Sea Crude: DOWN 0.9 percent at $80.65 per barrel

burs-rl/phz

M.AlAhmad--SF-PST