Portugal Colonial - Oil prices seesaw as investors await Iran response to US strikes

European stocks mostly retreated while Asian equities were mixed, with markets keeping a close eye on whether Iran will block the crucial Strait of Hormuz, which carries one-fifth of global oil output.

When trading opened on Monday, international benchmark crude contract Brent and US equivalent WTI both jumped more than four percent to hit their highest price since January.

They later dipped briefly into the red before recovering to trade slightly higher in midday trading.

"Will Iran choose to choke off the Strait of Hormuz or not? That is the big question," said Bjarne Schieldrop, chief commodities analyst at SEB bank.

But, "looking at the oil price this morning it is clear that the oil market doesn't assign a very high probability of it happening," he added.

Iran is the world's ninth-biggest oil-producing country, exporting just under half of the 3.3 million barrels it produces per day.

Tensions remained elevated as Iran and Israel intensified attacks on each other on the war's 11th day.

"The markets are not yet reacting with any degree of panic to the US airstrike on Iran's nuclear facilities as they await to see how Tehran responds," said AJ Bell investment director Russ Mould.

In Europe, Paris and Frankfurt stock markets both fell.

A closely watched survey showed Monday that eurozone business activity was almost stagnant again in June.

London's stock exchange was flat, with the rise in crude prices boosting shares in British energy majors BP and Shell.

But airlines, including EasyJet and British Airways-owner IAG, suffered losses on fears of rising energy costs and disruptions in travel to the Middle East.

In Asia, Tokyo was lower while Hong Kong and Shanghai gained.

"So far, satellite images reportedly suggest that oil continues to flow through the Strait, which may explain the muted market reaction to the news," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

She added that there is optimism that Iran will avoid full-blown retaliation "to prevent its own oil facilities from becoming targets and to avoid a widening conflict that could hurt China -- its biggest oil customer."

But "if things get uglier" the price of US crude could even spike beyond $100 per barrel, she said. Brent was trading at almost $78 per barrel on Monday while WTI was close to $75.

The dollar rose against other currencies but analysts questioned to what extent this would hold out.

- Key figures at around 1045 GMT -

Brent North Sea Crude: UP 0.9 percent at $77.73 per barrel

West Texas Intermediate: UP 0.9 percent at $74.52 per barrel

London - FTSE 100: FLAT at 8,772.82 points

Paris - CAC 40: DOWN 0.4 percent at 7,556.36

Frankfurt - DAX: DOWN 0.3 percent at 23,278.65

Tokyo - Nikkei 225: DOWN 0.1 percent at 38,354.09 (close)

Hong Kong - Hang Seng Index: UP 0.7 percent at 23,689.13 (close)

Shanghai - Composite: UP 0.7 percent at 3,381.58 (close)

New York - Dow: UP 0.1 percent at 42,206.82 (close)

Euro/dollar: DOWN at $1.1468 from $1.1516 on Friday

Pound/dollar: DOWN at $1.3381 from $1.3444

Dollar/yen: UP at 147.97 yen from 146.13 yen

Euro/pound: UP at 85.71 pence from 85.66 pence

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T.Vitorino--PC