Portugal Colonial - Oil prices rise, stocks fall on Middle East tensions

Wall Street shares were down in early deals while the London, Paris and Frankfurt stock exchanges were in the red in afternoon deals.

A strike by US dockworkers and speculation about the US Federal Reserve's next move on interest rates also had an influence on investors.

The dollar gained, helped by its haven status, with the British pound sinking more than one percent against the greenback as Bank of England chief Andrew Bailey hinted at faster cuts to UK borrowing costs.

In Asia, Tokyo closed two percent higher as the yen came off the boil.

Hong Kong fell for the first time in more than a week after a blistering surge fuelled by China's bold steps to stimulate its weak economy.

Iran's missile attack on Israel this week has raised fears that Israel's conflict with Tehran-backed Islamist militants in Gaza and now Lebanon may grow into a wider regional war.

The international benchmark for oil prices, Brent crude, topped $75 per barrel.

"Markets are in a state of suspense, bracing for Israel's anticipated retaliation against Iran -- a move that could catapult oil prices skyward," said independent markets analyst Stephen Innes.

"Brent crude has settled around $75 a barrel for now, but any military strike, particularly one targeting Iran's oil or nuclear infrastructure, could trigger a significant spike."

As Israel weighs retaliation, President Joe Biden said the United States was "fully supportive" of its ally but ruled out supporting a strike on Iran's nuclear sites.

Iran, which backs Lebanese militant group Hezbollah, said it would step up its response if Israel counterattacked, defying calls for de-escalation in a war that has cost more than 1,000 lives in Lebanon.

Israel's military said Thursday it killed 15 Hezbollah militants in an air strike on southern Lebanon.

Investors will turn their attention to key US non-farm payroll jobs report on Friday, which could provide clues about the Fed's plans for interest rates after last month's first cut in four years.

Data on Wednesday showed a surprise uptick in US private sector hiring in September.

"Friday's official payroll report will be critical, especially as markets weigh geopolitical risks against the domestic economy’s performance," said Fawad Razaqzada, market analyst at City Index and Forex.com.

- Key figures around 1345 GMT -

Brent North Sea Crude: UP 2.5 percent at $75.72 per barrel

West Texas Intermediate: UP 2.8 percent at $72.07 per barrel

New York - Dow: DOWN 0.7 percent at 41,909.53 points

New York - S&P 500: DOWN 0.3 percent at 5,693.02

New York - Nasdaq: DOWN 0.1 percent at 17,914.59

London - FTSE 100: DOWN 0.3 percent at 8,268.29

Paris - CAC 40: DOWN 1.1 percent at 7,492.26

Frankfurt - DAX: DOWN 0.8 percent at 19,006.22

Tokyo - Nikkei 225: UP 2.0 percent at 38,552.06 (close)

Hong Kong - Hang Seng Index: DOWN 1.5 percent at 22,113.51 (close)

Shanghai - Composite: Closed for a holiday

Pound/dollar: DOWN at $1.3122 from $1.3266 on Wednesday

Euro/dollar: DOWN at $1.1040 from $1.1048

Euro/pound: UP at 84.15 pence from 83.26 pence

Dollar/yen: UP at 146.56 from 146.38 yen

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X.M.Francisco--PC