London (AFP) - Oil prices rose on Wednesday, edging closer to $100 a barrel while stocks fell as further attacks between the United States and Iran dented hopes of an imminent peace deal.

Wall Street indexes retreated and European stocks were mostly in the red, following a mixed showing in Asia.

The dollar firmed as oil prices flared amid the Middle East escalations despite a supposed ceasefire, with a drone strike on a passenger terminal in Kuwait’s international airport killing one person and wounding dozens of others.

“Oil prices continue to make headway after the overnight strikes on Kuwait, and once more it is hitting most markets save for technology,” said IG chief market analyst Chris Beauchamp.

He said the situation was shifting from a delicate ceasefire towards something more like a low-intensity conflict.

“This simply leaves the vital issue of oil supplies unresolved, and the clock continues to tick down towards doomsday for oil inventories and the global economy,” Beauchamp added.

The war has hit economic growth prospects worldwide, with a more severe shock likely should no effective ceasefire be agreed before 2027, the OECD warned Wednesday.

Global economic growth is forecast to slip to 2.8 percent this year even if Gulf energy exports return to pre-conflict levels in the third quarter, the group of 38 industrialised countries said in its quarterly update.

“The longer the disruptions last, the larger the economic and social costs become,” said OECD chief economist Stefano Scarpetta.

Many countries would risk falling into recession, he noted, and a drop in investment spending – “including in energy-intensive AI” – would likely push up unemployment.

AI enthusiasm has in general sustained investor sentiment, helping drive Wall Street indexes to repeated record highs in recent months.

Tuesday was no exception, with US chipmaker Marvell Technology soaring 32 percent Tuesday after Nvidia CEO Jensen Huang hailed it as the next trillion-dollar firm.

However there was a bit of profit-taking on Wednesday.

“We had a huge rally, tech has been leading the way up. It’s perfectly normal and healthy to see the market consolidate after a big move up,” said Adam Sarhan of 50 Park Investments.

US equity markets remained in a “very bullish environment, specifically for tech and AI”, he added.

- Inflation pressures -

Two pieces of data helped keep risk sentiment from souring: activity in the US services sector expanded in May and private sector employment grew by more than expected.

The data comes ahead of US employment data Friday that could determine if the Federal Reserve will keep its benchmark rate stable or potentially hike borrowing costs to fight inflation.

In Asia, the yen briefly strengthened amid that speculation the Japanese authorities could step in to support the currency following last month’s intervention, before giving up its gains against the dollar.

That came as the Japanese cabinet approved a $19 billion supplementary budget to support households struggling with soaring everyday costs driven by the Iran war.

Tokyo’s index closed up more than two percent, helped by a surge in the share price of chipmaker Tokyo Electron.

Taipei was up two percent thanks to Taiwan Semiconductor Manufacturing Company’s strong advance.

- Key figures at around 1530 GMT -

Brent North Sea Crude: UP 1.4 percent at $97.35 a barrel

West Texas Intermediate: UP 1.6 percent at $95.26 a barrel

New York - DOW: DOWN 0.7 percent at 50,933.18 points

New York - S&P 500: DOWN 0.4 percent at 7,578.82

New York - Nasdaq Composite: DOWN 0.6 percent at 26,936.33

London - FTSE 100: DOWN 0.4 percent at 10,332.30 (close)

Paris - CAC 40: DOWN 0.7 percent at 8,150.42 (close)

Frankfurt - DAX: DOWN 1.3 percent at 24,795.94 (close)

Tokyo - Nikkei 225: UP 2.5 percent at 68,402.13 (close)

Hong Kong - Hang Seng Index: DOWN 1.6 percent at 25,633.21 (close)

Shanghai - Composite: UP 0.2 percent at 4,083.97 (close)

Euro/dollar: DOWN at $1.1607 from $1.1634 on Tuesday

Pound/dollar: DOWN at $1.3436 from $1.3470

Dollar/yen: UP at 159.98 yen from 159.92 yen

Euro/pound: UP at 86.40 pence from 86.37 pence

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