Portugal Colonial - Oil prices surge over Middle East tensions

Brent, the global benchmark, rose over three percent to trade at more than $81 per barrel.

Stock markets were mixed, taking a breather after US Federal Reserve chief Jerome Powell gave investors a boost last week by signalling that an interest rate cut was coming.

Israel and Hezbollah traded a barrage of fire Sunday after 10 months of cross-border clashes.

Hezbollah said it had launched a large-scaled drone and rocket attack on Israel.

Israel said it conducted air strikes into Lebanon that destroyed "thousands" of Hezbollah rocket launchers and thwarted a major attack.

The oil market was also reacting to Libya's eastern-based administration declaring that it was shutting down oil fields under its control and "suspending all production and exports until further notice".

The move by the Benghazi-based administration, which controls most of the country's oil fields, comes amid rising tensions after the UN-recognised government based in the capital Tripoli replaced the central bank governor on Monday morning.

- Stocks markets diverge -

In equities, Wall Street opened mixed, with the Dow and S&P 500 extending gains while the tech-heavy Nasdaq fell.

Paris CAC 40 rose in afternoon deals while Frankfurt and Milan were flat. London was closed for a holiday.

In Asia, Tokyo and Seoul finished in the red but Hong Kong and most other exchanges rose.

"It looks like the market had a very big move up in the last three weeks. Now we're seeing some profit taking," said Adam Sarhan of 50 Park Investments.

Equities had surged on Friday after Powell declared at a summit of central bankers in Wyoming that "the time has come" for the Fed to reduce rates that were raised to a 23-year high to tame inflation.

The Fed is now expected to slash its key rate at the next policy meeting on September 17-18, and the only doubts are how big the cut will be and how many more would follow.

The remarks helped push all three main New York indexes more than one percent higher on Friday.

Powell stressed that the "timing and pace" of cuts would depend on data, so analysts will keep a close eye on indicators in the coming weeks.

New US second-quarter economic growth figures will be published Thursday, followed by the Fed's preferred gauge of inflation -- the personal consumption expenditures (PCE) price index -- on Friday and jobs data next week.

Weak jobs data rocked the markets in early August, as analysts worried that the Fed had waited too long to cut rates and avoid a recession.

Deutsche Bank analysts said they expect the Fed to cut rates by 0.25 percentage points next month but that "weak labour-market data could shift the focus" to a half-point reduction.

- Key figures around 1400 GMT -

Brent North Sea Crude: UP 3.1 percent at $81.47 per barrel

West Texas Intermediate: UP 3.5 percent at $77.48 per barrel

New York - Dow: UP 0.5 percent at 41,373.39 points

New York - S&P 500: UP 0.1 percent at 5,639.11

New York - Nasdaq Composite: DOWN 0.3 percent at 17,824.37

Paris - CAC 40: UP 0.4 percent at 7,603.74

Frankfurt - DAX: FLAT at 18,630.65

London - FTSE 100: Closed for a holiday

Tokyo - Nikkei 225: DOWN 0.7 percent at 38,110.22 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 17,798.73 (close)

Shanghai - Composite: FLAT at 2,855.52 (close)

Dollar/yen: UP at 144.45 yen from 144.34 yen on Friday

Euro/dollar: DOWN at $1.1156 from $1.1193

Pound/dollar: DOWN at $1.3183 from $1.3209

Euro/pound: DOWN at 84.62 pence from 84.70 pence

burs-lth/db

L.E.Campos--PC