GLOBAL MARKETS-Brent tops $100 on renewed Gulf clashes as AI drives Asia stocks to weekly rise

"Since the focus is on the Middle East and the impact comes via inflation more than growth, especially in the U.S., maybe the payrolls report is not quite as crucial as it has been sometimes in the past." Local government elections across Britain showedheavy early losses for the ruling Labour Party, although ⁠Prime Minister Starmer said he would not resign.

Oil prices rose and stocks slipped as ​the U.S. and Iran exchanged fire in the Middle East, though ‌many ​equity markets, particularly in Asia, were headed for stellar weekly gains on booming AI demand. Benchmark Brent crude futures were up about 1% to $101 a barrel, while European stocks fell 0.9%.

Traders were also keeping an eye on Labour Party losses in British elections, which could pressure Prime Minister Keir Starmer's leadership, though ‌sterling inched up, and British bonds and stocks traded in line with European peers as results were coming in. MIDDLE EAST CLASHES The United States and Iran clashed in the Gulf and the UAE came under renewed attack in a test of a month-long ceasefire, but the warring parties downplayed the situation, leaving investors guessing.

"The market seem to be taking every chance to price in a quick end to the war," said Jan von Gerich, chief analyst ‌at Nordea. "But it seems unlikely there's going to be an agreement. I still think there are going to be disruptions in the Strait (of Hormuz) for a longer time and it won't be resolved any time soon."

Stock ‌markets in Europe were lower. The pan-continental STOXX 600 was down 0.9%, while major bourses in Frankfurt and Paris were off a similar amount. Stock markets in Asia, which have been soaring thanks to strong revenue and spending plans from the U.S. AI hyperscalers - which will benefit the region's chipmakers - slipped slightly from record highs.

MSCI's broadest index of Asian shares outside Japan fell 1%, although South Korea's KOSPI inched up 0.1%, for a weekly gain of more than 13.5% - the largest since 2008 - on the back of a surge ⁠in Samsung and ​SK Hynix. Taiwan's benchmark was up 7% this week and ⁠Japan's Nikkei rose 5.4%. The European benchmark was heading for a 0.1% weekly fall.

DOLLAR INCHES LOWER Currency markets were broadly steady with the dollar falling slightly and heading for its second straight weekly loss, although the yen remained in focus. Japan intervened in the foreign exchange ⁠market during holidays in early May to stave off further falls in the battered currency, a source familiar with the matter told Reuters. The dollar was last down 0.1% to 156.8 yen, and was set for its second weekly fall against ​Japan's currency, although it struggled to sustain gains beyond 155 after surges on suspected intervention to the tune of nearly $70 billion since last Thursday. The euro bought $1.1742. China's yuan, Asia's best-performing currency since the war ⁠broke out, is on the cusp of strengthening past 6.8 to the dollar and sits near its strongest since 2023.

U.S. JOBS AND UK ELECTIONS IN FOCUS Investors are awaiting the U.S. non-farm payrolls report on Friday, with jobs expected to have increased in April by 62,000 after ⁠rebounding ​178,000 in March, a Reuters survey of economists shows.

"The labour market is still holding up reasonably well," Nordea's von Gerich said. "Since the focus is on the Middle East and the impact comes via inflation more than growth, especially in the U.S., maybe the payrolls report is not quite as crucial as it has been sometimes in the past."

Local government elections across Britain showedheavy early losses for the ruling Labour Party, although ⁠Prime Minister Starmer said he would not resign. "Gilts are already under scrutiny due to inflation risks, and adding political uncertainty to the mix could further push (global) investors to look elsewhere," said ING analysts.

Britain's 10-year ⁠gilt yield was little changed on the day at ⁠4.936% although remained close to a three-decade high. TARIFFS A U.S. trade court ruled Trump's latest 10% temporary global duties are unjustified under a 1970s trade law. But analysts expect a swift appeal and little overall impact on U.S. levies.

Treasury yields had tracked crude prices higher through Thursday as traders worried about inflation, but did ‌not move much more on Friday with ‌the benchmark 10-year yield at 4.38%. Bitcoin was drifting towards a sixth weekly gain in a row at $79,680.