Portugal Colonial - European, US stocks back in sell-off mode as oil prices surge

An equity market rebound petered out after Asian markets closed, with European exchanges shedding around 1.5 percent and Wall Street's main indices also retreating.

Markets have been thrown into turmoil since the United States and Israel began strikes against Iran on Saturday, killing its supreme leader and sparking retaliatory attacks across the Gulf.

Tehran also effectively shut down the Strait of Hormuz, through which a fifth of the world's crude oil and liquefied natural gas travel, sparking fears of shortages and sending prices soaring.

While oil and gas prices dipped on Wednesday, they rebounded with a vengeance on Thursday.

Brent crude, the main international contract, climbed 4.9 percent, while WTI, the main US contract, rose 8.5 percent.

Briefing.com analyst Patrick O'Hare cited unconfirmed reports of an Iranian strike on a tanker offshore Iraq that helped push prices higher.

While President Donald Trump has promised to address the exodus of activity in the Strait of Hormuz, O'Hare noted that his administration had not given a timeframe for when Navy escorts might start.

Higher oil prices are "going to translate into higher gasoline prices coming at a time when people are already feeling pinched by high costs," O'Hare said.

Markets will be closely watching Friday's US labor market report, but "the direction of travel for oil prices has the potential to supersede it," O'Hare said.

National Australia Bank's Ken Crompton said that oil traders were largely unmoved by Trump's pledge to protect ships passing through the Strait of Hormuz, which had provided a glimmer of support Wednesday.

"The fact is it's just not feasible to reasonably protect all ships in the region," he wrote, pointing out that Houthi rebels in Yemen had carried out multiple attacks on ships in the past.

China, fearing supply shortages, has asked its largest oil refiners to suspend exports of diesel and gasoline, according to a Bloomberg News report.

Concerns about how long the war will last also weighed on stocks, with Danish shipping giant Maersk saying it was suspending bookings in the Gulf until further notice.

In Asian equity trading, Seoul led gains, with the Kospi soaring 12 percent at one point following an earlier collapse. Tokyo closed up almost two percent and Hong Kong and Shanghai also advanced.

- Key figures at around 2115 GMT -

Brent North Sea Crude: UP 4.9 percent at $85.41 per barrel

West Texas Intermediate: UP 8.5 percent at $81.01 per barrel

New York - DOW: DOWN 1.6 percent at 47,954.74 (close)

New York - S&P 500: DOWN 0.6 percent at 6,830.71 (close)

New York - Nasdaq Composite: DOWN 0.3 percent at 22,748.99 (close)

London - FTSE 100: DOWN 1.5 percent at 10,413.94 (close)

Paris - CAC 40: DOWN 1.5 percent at 8,045.80 (close)

Frankfurt - DAX: DOWN 1.6 percent at 23,815.75 (close)

Seoul - Kospi: UP 9.6 percent at 5,683.90 (close)

Tokyo - Nikkei 225: UP 1.9 percent at 55,278.06 (close)

Hong Kong - Hang Seng Index: UP 0.3 percent at 25,321.34 (close)

Shanghai - Composite: UP 0.6 percent at 4,108.57 (close)

Euro/dollar: DOWN at $1.1604 from $1.1634 on Wednesday

Pound/dollar: DOWN at $1.3357 from $1.3375

Dollar/yen: UP at 157.55 yen from 157.06 yen

Euro/pound: DOWN at 86.87 pence from 87.00 pence

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S.Caetano--PC