Il Nuovo Postiglione - Stock markets recover as oil retreats

Brent and the key US contract, West Texas Intermediate, declined more than two percent. Brent had soared seven percent Thursday and WTI more than six percent.

The sizeable jumps had come after Yemen's Houthi rebels struck oil tankers in the Red Sea, potentially opening a new front in the Middle East war.

US President Donald Trump meanwhile threatened the Iran-backed fighters with "major military punishment".

Despite the United States launching fresh strikes Friday on Iran, there was relief on markets that some ships were still able to pass through the Bab al-Mandeb strait, a crucial passage into the Red Sea.

"Ships with Saudi crude are still crossing... so for now, it is not a full blockade, reducing a bit the risk of an even tighter oil market," Giovanni Staunovo, a commodities analyst at Swiss bank UBS, told AFP.

Wall Street opened broadly stable, with the Nasdaq Composite dipping 0.1 percent as tech stocks continued to struggle.

"This is not a robust response given the scope of yesterday's losses, but it is something to build on for a market that had its foundation shaken yesterday," said Briefing.com analyst Patrick O'Hare, referring to when the Nasdaq fell more than two percent as tech stocks took a beating while the Dow and S&P 500 both lost one percent.

With tech stocks not as predominant in Europe, the region's main stock markets advanced.

Asian stock markets followed the sell-off Thursday on Wall Street as world markets were battered by a perfect storm of the resurgent Middle East war, the spike in oil prices back past $100 and concerns about the artificial intelligence (AI) boom.

While traders in the past have been able to offset the bad news in one area by focusing on the positives elsewhere, analysts said they were now struggling to fire-fight on three fronts: high oil prices, high government borrowing costs and jitters over tech company valuations.

Tech firms were once again bearing the brunt of the selling owing to growing concerns about the colossal sums ploughed into AI hardware, factories and research, with many now questioning when they will see returns.

The latest blows came Thursday as Google parent Alphabet and Tesla came under scrutiny for massive capital spending drives.

Alphabet shares dived almost seven percent and Tesla plunged more than 14 percent.

Meta, Microsoft, and Amazon had already flagged that they would fork out more than $700 billion this year on AI ambitions, and are due to report next week.

Meanwhile, government bond yields jumped with the yield on 10-year US Treasuries hitting an 18-month high, and expectations of interest rate hikes have risen.

David Morrison at Trade Nation said expectations that the US Federal Reserve could hike interest rates at its meeting next week have risen from 13 percent last week to 30 percent currently.

"Perhaps more seriously, the CME's FedWatch Tool shows a 90 percent probability of at least one 25-basis point rate hike before year-end," he said.

- Key figures around 1330 GMT -

Brent North Sea Crude: DOWN 2.7 percent at $97.93 per barrel

West Texas Intermediate: DOWN 2.3 percent at $90.10 a barrel

New York - Dow: UP 0.2 percent at 51,808.68 points

New York - S&P 500: UP less than 0.1 percent at 7,411.41

New York - Nasdaq Composite: DOWN 0.1 percent at 25,108.77

London - FTSE 100: UP 0.6 percent at 10,706.09

Paris - CAC 40: UP 0.5 percent at 8,343.15

Frankfurt - DAX: UP 0.8 percent at 24,969.00

Tokyo - Nikkei 225: DOWN 2.7 percent at 64,611.15 (close)

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 24,963.23 (close)

Shanghai - Composite: DOWN 1.6 percent at 3,814.20 (close)

Euro/dollar: DOWN at $1.1369 from $1.1377 on Thursday

Pound/dollar: UP at $1.3319 from $1.3315

Euro/pound: DOWN at 85.38 pence from 85.44 pence

Dollar/yen: UP at 163.87 yen from 163.85

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S.Abato--INP