Sawt Falasteen - Oil prices pare strong gains, stocks waver on Middle East worries

Brent crude, the international benchmark, briefly topped $75 per barrel while West Texas Intermediate was above $72, with both more than three percent higher before paring the gains to barely 0.5 percent.

Oil producer Iran launched its second ever direct attack on Israel on Tuesday, firing what it said were 200 missiles in retaliation for the killings of Tehran-backed militants.

Israeli Prime Minister Benjamin Netanyahu vowed to make Iran "pay" for its "big mistake" while Tehran warned Wednesday that it would launch an even bigger attack if it is targeted.

The attack sent oil prices surging by as much as five percent on Tuesday.

"It is all about Middle East conflict now, when it comes to oil prices," said Fawad Razaqzada, analyst at City Index and Forex.com.

"The extent of Israel's potential response to Iran will influence how much further geopolitical risk markets are likely to factor in," he said.

Prices could fall if Israehas a "measured" response and avoids hitting Iran's nuclear facilities, he said.

"However, if Israel lures in the US in its fight, or responds with an even bigger attack this time, then watch out for oil prices to potentially sky rocket," Razaqzada added in a note.

Naeem Aslam, analyst at Zaye Capital, said prices could be "flirting near the $100" mark if a really serious threat materialises.

Oil prices had been struggling this year due to concerns over weakness in the Chinese economy and expectations of higher production from Saudi Arabia and seven other members of the OPEC+ crude cartel.

"With Israel now expected to retaliate, the chances of further escalation are high, prompting a pivot in (oil) market sentiment from concerns over excess supply to fears of shortages," said Ricardo Evangelista, senior analyst at ActivTrades.

- Wall Street edging into green -

On Wall Street the Dow, the tech-heavy Nasdaq and broad-based S&P 500 were all barely up some two hours into trading while equity markets closed mixed in Europe. Frankfurt edged down with Paris ending flat with London closing the session just ahead, helped by share-price gains for oil giants BP and Shell.

Hong Kong's stock market surged more than six percent by the close, continuing a sharp rally after China last week unveiled a raft of measures to boost its economy, particularly the troubled property sector.

Markets were closed in Shanghai and Shenzhen for a week-long holiday, having also zoomed higher before the break. Tokyo fell more than two percent.

Property developers led the surge in Hong Kong on Wednesday, with Agile Group rocketing 160 percent higher and Sunac China Holdings up more than 75 percent.

However, the firms were still at just a fraction of their prices three years ago.

While the Middle East conflict has investors worried, they remain focused on the US Federal Reserve's future plans for interest rates and will look closely at jobs data Friday for clues about the central bank's next move.

- Key figures around 1550 GMT -

Brent North Sea Crude: UP 0.4 percent at $73.87 per barrel

West Texas Intermediate: UP 0.5 percent at $70.20 per barrel

New York - Dow: UP 0.2 percent at 42,252.92 points

New York - S&P 500: UP 0.2 percent at 5,718.52

New York - Nasdaq: UP 0.3 percent at 17,965.90

London - FTSE 100: UP 0.2 percent at 8,290.86 (close)

Paris - CAC 40: FLAT at 7,577.59 (close)

Frankfurt - DAX: DOWN 0.3 percent at 19,164.75 (close)

Hong Kong - Hang Seng Index: UP 6.2 percent at 22,443.73 (close)

Tokyo - Nikkei 225: DOWN 2.2 percent at 37,808.76 (close)

Shanghai - Composite: Closed for a holiday

Euro/dollar: DOWN at $1.1043 from $1.1067 on Tuesday

Pound/dollar: DOWN at $1.3266 from $1.3279

Dollar/yen: UP at 146.18 yen from 143.57 yen

Euro/pound: DOWN at 83.25 pence from 83.34 pence

A.AlHaj--SF-PST