Oil extends gains and stocks fall on fresh Hormuz worries

Oil prices extended gains and stocks fell further on Friday amid fading optimism over a deal to reopen the Strait of Hormuz, as reports said Iran was planning to block US and Israeli ships from the waterway as part of a deal with Oman.

Markets had enjoyed a healthy run-up at the start of the week as US President Donald Trump called off strikes on the Islamic republic and said an agreement was close, even though Tehran denied talks had taken place.

At the same time Iran said it was close to a pact with Muscat on managing the key waterway -- which has been choked off for most of the Middle East war -- but that the US would need to end its own naval blockade of Iranian ports.

Crude prices had begun edging up Wednesday and rallied as much as four percent Thursday as the Fars news agency said Iran would look to prevent US and Israeli vessels from using the strait in any deal with Oman.

That dampened hopes for a full reopening of the waterway -- through which a fifth of global oil and LNG passes -- and revived fears of a fresh spike in inflation and put interest rate hikes back in the picture.

Both main contracts rose around one percent on Friday.

Equity markets were in turn mostly down, with Seoul again weighed by concerns over the AI boom while Tokyo, Hong Kong, Sydney, Wellington, Taipei and Manila were also lower. Shanghai and Singapore edged up.

That came after a pullback on Wall Street, where the Dow came off three days of record highs.

Analysts said the latest developments had traders questioning whether the week's early gains were justified.

They also come ahead of the release of key US jobs data later in the day, which will be followed next week by consumer price figures -- both of which could be crucial in the Federal Reserve's decision-making on rates.

Clark Bellin at Bellwether Wealth said the jobs figures are of major importance, adding "we will need to see a number that is not too hot and not too cold in order for the market to keep grinding higher".

And Michael Hewson of Market Insights added: "The main item of note is US (consumer price index) for July, and whether we will see further evidence of slowing price pressures.

"This matters, given the recent dissent of three (Fed policy board) members in favour of a 25-basis-point rate hike."

He added that "while we've seen a modest pull back from the recent highs (in CPI) the bigger concern is that the sustained volatility in prices could mean prices stabilise at a higher baseline.

"These are the concerns that prompted the likes of the three dissents on interest rate policy at the recent Fed meeting."

Tokyo - Nikkei 225: DOWN 1.0 percent at 65,039.16 (break)

Hong Kong - Hang Seng Index: DOWN 0.4 percent at 25,423.90

Shanghai - Composite: UP 0.2 percent at 3,909.05

Dollar/yen: DOWN at 158.36 yen from 158.40 yen on Thursday

Euro/dollar: DOWN at $1.1521 from $1.1524

Pound/dollar: DOWN at $1.3452 from $1.3456

Euro/pound: DOWN at 85.64 pence at 85.65 pence

West Texas Intermediate: UP 0.9 percent at $78.01 per barrel

Brent North Sea Crude: UP 1.1 percent at $83.38 per barrel

New York - DOW: DOWN 0.9 percent at 53,885.10 (close)

London - FTSE 100: DOWN 0.2 percent at 10,867.89 (close)