Il Nuovo Postiglione - Stocks gain as oil drops on Mideast hopes

Both main crude contracts have tumbled this week as Iran and Oman edge towards a deal to open a temporary shipping corridor in the Strait of Hormuz.

While US Treasury Secretary Scott Bessent said Washington was declaring an "economic D-Day" against Tehran and its trade partners, the measures were regarded as softer than many had feared.

Oil prices dropped more than three percent Wednesday, with international benchmark Brent back well below $90 a barrel.

"This has helped take the edge off market fears about inflation and brought government bond yields down," said AJ Bell investment director Russ Mould.

In Europe, Paris and Frankfurt rose, while London was weighed by energy heavyweights BP and Shell. US equity futures were little changed in pre-market trading.

Earlier in the day, Tokyo, Hong Kong and Shanghai all closed higher.

"Assuming there is no major movement...in geopolitical terms, tonight's second quarter results from Nvidia are likely to set the tone for markets through the remainder of the week," Mould added.

The chipmaking titan has become a key marker of the reporting season as investors use it to judge the health of the AI boom that has sent markets to record highs over the past two years.

The figures come during rising angst about when the vast sums of cash pumped into AI software and hardware will see a meaningful return, if ever.

"The second-quarter number itself may end up mattering less than what management says about the quarter ahead," said Axel Rudolph, a market analyst at IG.

"It's entirely possible for the headline print to look solid and the stock to still sell off if the third-quarter guide comes in below what's already embedded in current estimates," he added.

Traders are also waiting for Thursday's start of the annual Jackson Hole symposium of central bankers and other economic policy makers. which could provide clues on US interest rate policy.

Wednesday sees the release of US personal consumption expenditures inflation data, the Federal Reserve's favoured gauge of inflation that could play a role in policymakers' decision-making.

A soft reading could temper hike worries, but an outsized figure would likely ramp up bets on an increase in borrowing costs.

- Key figures at around 1115 GMT -

West Texas Intermediate: DOWN 2.6 percent at $80.21 per barrel

Brent North Sea Crude: DOWN 2.5 percent at $85.06 per barrel

London - FTSE 100: DOWN 0.1 percent at 10,871.69

Paris - CAC 40: UP 0.4 percent at 8,475.83

Frankfurt - DAX: UP 0.2 percent at 26,313.94

Tokyo - Nikkei 225: UP 0.6 percent at 66,262.16 (close)

Hong Kong - Hang Seng Index: UP 0.6 percent at 25,652.97 (close)

Shanghai - Composite: UP 0.6 percent at 3,912.52 (close)

New York - DOW: UP 0.3 percent at 53,577.40 (close)

Dollar/yen: DOWN at 159.11 yen from 159.16 yen on Tuesday

Euro/dollar: DOWN at $1.1666 from $1.1674

Pound/dollar: DOWN at $1.3623 from $1.3648

Euro/pound: UP at 85.63 pence from 85.52 pence

O.Nardolillo--INP