Portugal Colonial - Oil prices swing with stocks as traders keep tabs on Israel-Iran crisis

While the crisis in the Middle East continues to instill uncertainty on trading floors as the two foes exchange deadly missiles strikes, talk that the Islamic republic wanted to make a nuclear deal was providing some optimism.

After Friday's surge sparked by Israel's attacks on its regional foe, crude ticked more than one percent lower Monday as traders bet that the conflict would not spread throughout the Middle East and key oil sites were mostly left untouched.

Prices edged back up after Trump took to social media calling for the evacuation of the Iranian capital, which is home to nearly 10 million people.

"Iran should have signed the 'deal' I told them to sign," he said, referring to nuclear talks that were taking place.

"What a shame, and waste of human life. Simply stated, IRAN CAN NOT HAVE A NUCLEAR WEAPON. I said it over and over again! Everyone should immediately evacuate Tehran!"

Trump later poured cold water on remarks from French President Emmanuel Macron that he was leaving the G7 summit in Canada to discuss a possible ceasefire.

Oil prices spiked around two percent Tuesday before reversing the gains, with Schroders senior economist George Brown saying it was unlikely Iran would strangle flows of the commodity through a key supply route.

"The likelihood of Iran taking any action in the Strait of Hormuz, the often-touted disaster scenario for oil markets, appears very remote," he wrote in a note.

"Such action would impact flows for the other Middle-East nations who are aiming to mediate the situation, while inflicting little harm on Israel."

Traders are keeping a wary eye on developments in the crisis, with the aircraft carrier USS Nimitz leaving Southeast Asia on Monday after cancelling a Vietnam visit as the Pentagon announced it was sending "additional capabilities" to the Middle East.

Prime Minister Benjamin Netanyahu insisted Israel's campaign was "changing the face of the Middle East".

Trump has maintained that Washington has "nothing to do" with its ally's campaign, but Iran's foreign minister said Monday the US leader could halt the attacks with "one phone call".

Tehran has said it would hit US sites if Washington got involved.

Meanwhile, top diplomats from Britain, France and Germany called on Iran to quickly return to the negotiating table over its nuclear programme, a French diplomatic source said.

The US president had earlier said Iran wanted to make a deal, adding "as soon as I leave here, we're going to be doing something".

He later left the gathering in the Rockies, telling reporters: "I have to be back as soon as I can. I wish I could stay for tomorrow, but they understand, this is big stuff."

Tehran had signalled a desire to de-escalate and resume nuclear talks with Washington as long as the United States did not join conflict, according to the Wall Street Journal.

Equities were mixed in Asian trade, with Tokyo, Singapore, Seoul, Manila, Bangkok, Jakarta and Taipei all advancing, while Hong Kong, Sydney, Wellington and Mumbai struggled along with London, Paris and Frankfurt.

Shanghai was flat.

The region struggled to follow a positive lead from Wall Street, with dealers also keeping tabs on the G7 summit, where world leaders pushed back against Trump's trade war, arguing it posed a risk to global economic stability.

Leaders from Britain, Canada, Italy, Japan, Germany and France called on the president to reverse course on his plans to impose even steeper tariffs on countries across the globe next month.

On currency markets the yen was slightly down against the dollar after the Bank of Japan stood pat on interest rates and said it would slow the tapering of its bond purchases.

Carol Kong, an analyst at the Commonwealth Bank of Australia, told AFP: "Slowing the bond taper will help keep interest rates lower than otherwise, providing support to the economy amid heightened trade uncertainty."

- Key figures at around 0715 GMT -

West Texas Intermediate: DOWN 0.4 percent at $71.48 per barrel

Brent North Sea Crude: DOWN 0.4 percent at $72.97 per barrel

Tokyo - Nikkei 225: UP 0.6 percent at 38,536.74 (close)

Hong Kong - Hang Seng Index: DOWN 0.5 percent at 23,940.90

Shanghai - Composite: FLAT at 3,387.40 (close)

London - FTSE 100: DOWN 0.5 percent at 8,833.19

Euro/dollar: DOWN at $1.1560 from $1.1562 on Monday

Pound/dollar: DOWN at $1.3561 from $1.3579

Dollar/yen: UP at 144.88 yen from 144.79 yen

Euro/pound: UP at 85.26 pence from 85.12 pence

New York - Dow: UP 0.8 percent at 42,515.09 (close)

E.Ramalho--PC