LONDON, April 17: European stock markets rebounded Wednesday after heavy losses the previous session, as traders tracked fallout from Irans attack on Israel and assessed the outlook for interest rates.
Paris led the way nearing the half-way stage, jumping 1.3 percent after losing a similar amount Tuesday.
In Asia, Tokyo slumped for a second session running.
Oil prices slid close to one percent, with analysts highlighting that crude supplies had not been affected after the firing of missiles and drones at the weekend by crude-rich Iran.
"European markets have enjoyed a welcome reprieve from the selling pressure that has dominated much of the week," noted Joshua Mahony, chief market analyst at Scope Markets.
London won 0.5 percent, helped by another drop to UK inflation. Analysts expect the Bank of England to start cutting interest rates later this year, though the exact timing is unclear with prices growing more than expected.
Across the Atlantic, hotter-than-expected US inflation and jobs data has forced investors to whittle down their bets on how many interest rate cuts the Federal Reserve will make this year.
Fed boss Jerome Powell on Tuesday indicated that US borrowing costs could stay higher for longer.
"The hawkish tone from Powell didn come as much of a surprise, considering the persistent inflationary challenges, the robust state of the US economy, and the Feds commitment to data-driven decision-making," said Stephen Innes of SPI Asset Management.
Elsewhere, traders are keeping an eye on developments in the Middle East amid worries of a region-wide conflict.
"Oil prices are under pressure again for the third straight session after a sharp rally last week with the market waiting to see how Israel plans to respond," noted Victoria Scholar, head of investment at Interactive Investor.
"Investors are trying to weigh up the geopolitical risks in the Middle East and the size of US crude inventories on the supply side versus the outlook for the US and Chinese economies on the demand side."
Israel on Wednesday faced pressure from allies to refrain from striking back at Iran for its unprecedented attack, as Washington and Brussels vowed to ramp up sanctions against the Islamic republic. —AFP