LONDON (REUTERS)

Oil prices rose and stocks slipped as the US and Iran exchanged fire, though many equity markets, particularly in Asia, were headed for stellar ​weekly gains on booming AI demand.

Benchmark Brent crude futures were up about 1% to $101 a barrel, while European stocks fell 0.9%.

Traders were also keeping an eye on Labour Party losses in British elections, which could pressure Prime Minister Keir Starmer's leadership, though sterling inched up, and British bonds and stocks traded in line ⁠with European peers as results were coming in.

CLASHES

The United States and Iran clashed in the Gulf in a test of a month-long ceasefire, but the warring parties downplayed the situation, leaving investors guessing.

Stock markets in Europe were lower. The pan-continental STOXX 600 was down 0.9%, while major bourses in Frankfurt and Paris were off a similar amount.

Stock markets in Asia, which have been ‌soaring thanks to strong revenue and spending plans from the US AI hyperscalers - which will benefit the ‌region's chipmakers - slipped slightly from record highs.

MSCI's broadest index of Asian shares outside Japan fell 1%, although South Korea's KOSPI inched up 0.1%, for a weekly gain of more than 13.5% - the largest since 2008 - on the back of a surge in Samsung and SK Hynix.

Japan's Nikkei rose 5.4%.

The European benchmark was heading for a 0.1% weekly fall.

DOLLAR INCHES LOWER

Currency markets were broadly steady with the dollar falling slightly and heading for its second straight weekly loss, although the yen remained in focus.

Japan intervened in the foreign exchange market during holidays in early May to stave off further falls in the battered currency, a source familiar with the matter told Reuters.

The dollar was last down 0.1% to 156.8 yen, and was set for its second weekly ‌fall against Japan's currency, although it struggled to sustain gains ​beyond 155 after surges on suspected intervention to the tune of nearly $70 billion since last Thursday.

The euro bought $1.1742. China's yuan, Asia's best-performing currency since the war broke out, is on the cusp of strengthening past 6.8 to the dollar and sits near its strongest since 2023.

TARIFFS

A US trade court ruled Trump's latest 10% temporary global duties are unjustified under a 1970s trade law. But analysts expect a swift appeal and little overall impact on US levies.

Treasury yields had tracked crude prices higher through Thursday as traders worried about ​inflation, but did not move much more on Friday with the benchmark 10-year yield at 4.38%.

Bitcoin was drifting towards ​a sixth weekly gain in a row at $79,680.