The Japan Times - Oil prices extend gains on Iran unrest

European and Asian stock markets mostly gained, with speculation about a possible snap election in Japan pushing up Tokyo shares.

Wall Street stocks retreated Tuesday as markets weighed muted US inflation data, mixed bank earnings and concerns surrounding the US probe into Federal Reserve boss Jerome Powell.

Much attention among traders remained on Iran, where a funeral ceremony began in Tehran on Wednesday for over 100 members of the security forces and other "martyrs" killed in the wave of protests, state television said.

"Traders are closely watching the political unrest in Iran and possible US intervention, which could threaten disruption to the country's... oil production," noted Helge Andre Martinsen, senior energy analyst at DNB Carnegie.

In equities trading, Tokyo closed up 1.5 percent as the yen slumped to its lowest value since mid-2024 with media reports saying that Prime Minister Sanae Takaichi planned to hold an election as soon as February 8.

Takaichi's cabinet -- riding high in opinion polls -- has approved a record 122.3-trillion-yen ($768 billion) budget for the fiscal year from April 2026.

She has vowed to get parliamentary approval as soon as possible to address inflation and shore up the world's fourth-largest economy.

"We are seeing a shift in sentiment that could see European and Asian equities gain ground on their US counterparts," noted Joshua Mahony, chief market analyst at Scope Markets.

London and Paris were up slightly nearing the half-way stage Wednesday, while Frankfurt fell.

Traders are awaiting a possible US Supreme Court ruling on Wednesday on the legality of US President Donald Trump's sweeping tariffs.

A ruling against the government would prove a temporary setback to its economic and fiscal plans, although officials have noted that tariffs can be reimposed by other means.

It comes as China said its trade last year reached a "new historical high", surpassing 45 trillion yuan ($6.4 trillion) for the first time.

Global demand for Chinese goods has held firm despite a slump in exports to the United States after Trump hiked tariffs.

Other trade partners more than filled the gap, increasing Chinese exports overall by 5.5 percent in 2025.

"We expect this resilience to continue through 2026," said Zichun Huang, China economist at Capital Economics.

On the corporate front, British energy giant BP revealed a write-down of up to $5 billion linked to its energy transition efforts that will be reflected in the company's upcoming annual results.

Its share price was down 0.8 percent approaching midday in London.

- Key figures at around 1130 GMT -

London - FTSE 100: UP 0.3 percent at 10,161.60 points

Paris - CAC 40: UP 0.1 percent at 8,356.49

Frankfurt - DAX: DOWN 0.4 percent at 25,328.90

Tokyo - Nikkei 225: UP 1.5 percent at 54,341.23 (close)

Hong Kong - Hang Seng Index: UP 0.6 percent at 26,999.81 (close)

Shanghai - Composite: DOWN 0.3 percent at 4,126.09 (close)

New York - Dow: DOWN 0.8 percent at 49,191.99 (close)

Euro/dollar: UP at $1.1650 from $1.1643 on Tuesday

Pound/dollar: UP at $1.3449 from $1.3426

Dollar/yen: DOWN at 158.76 yen from 159.15 yen

Euro/pound: DOWN at 86.64 pence from 86.71 pence

Brent North Sea Crude: UP 1.4 percent at $66.40 per barrel

West Texas Intermediate: UP 1.4 percent at $62.02 per barrel

burs-bcp/ajb/rl

Y.Hara--JT