Portugal Colonial - Oil rebounds as markets track Iran-Israel ceasefire

Focus was also on a NATO summit that is expected to sign off a sharp increase to military spending by the United States and its allies.

The dollar recovered mildly, having slumped Tuesday after Federal Reserve boss Jerome Powell did not rule out the prospect of cut to US interest rates, as President Donald Trump's tariffs war risks slowing the economy.

"Optimism about the fragile ceasefire holding between Iran and Israel has bubbled through markets... but more doubts are now creeping in about the truce holding," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Asian stock markets closed higher following rallies on Wall Street and in Europe Tuesday on news of the ceasefire declared by Trump.

The world's main oil contract, Brent North Sea crude, climbed close to one percent Wednesday, having tumbled almost seven percent Tuesday.

Brent and the main US crude contract, WTI, had soared Monday in the first reaction to the US bombing of Iran.

Trump on Wednesday said the US strikes resulted in the "total obliteration" of Iran's nuclear capabilities, setting the country's atomic programme back by "decades".

"They're not going to be building bombs for a long time," he said, adding that the ceasefire between Israel and Iran was going "very well".

Trump's comments were made in The Hague, where the president struck a conciliatory tone towards NATO allies, framing an expected deal on increased defence spending as a "great victory for everyone".

Trump appeared keen to share the plaudits for a deal set to see the 32 countries commit to spending five percent of output on defence by 2035.

"Hot geopolitics is the big subject of the debate at the NATO summit and has prompted nations to pledge to sharply increase their military spending targets," Streeter added.

She said the deal was likely to support share prices of defence groups, even if "much of the spending expectations have already been baked into valuations".

The share price of British defence company Babcock International surged 13 percent in London trading Wednesday, helped by its strong earnings update and a plan to repurchase shares.

- Key figures at around 1045 GMT -

Brent North Sea Crude: UP 0.8 percent at $66.68 per barrel

West Texas Intermediate: UP 0.9 percent at $64.94 per barrel

London - FTSE 100: DOWN 0.1 percent at 8,753.44 points

Paris - CAC 40: DOWN 0.2 percent at 7,598.84

Frankfurt - DAX: DOWN 0.4 percent at 23,550.02

Tokyo - Nikkei 225: UP 0.4 percent at 38,942.07 (close)

Hong Kong - Hang Seng Index: UP 1.2 percent at 24,474.67 (close)

Shanghai - Composite: UP 1.0 percent at 3,455.97 (close)

New York - Dow: UP 1.2 percent at 43,089.02 (close)

Euro/dollar: DOWN at $1.1604 from $1.1625 on Tuesday

Pound/dollar: DOWN at $1.3606 from $1.3616

Dollar/yen: UP at 145.72 yen from 144.89 yen

Euro/pound: UP at 85.29 pence from 85.24 pence

burs-bcp/ajb/lth

R.J.Fidalgo--PC