Oil prices extend rally on Middle East tensions

Major stock markets have diverged, while oil prices extended a rally after Iran's missile attack on Israel fanned fears of a Middle East-wide conflict.

London's top-tier FTSE 100 index rose slightly on Wednesday, helped by share-price gains for oil giants BP and Shell.

Paris and Frankfurt fell in early afternoon deals.

Hong Kong's stock market surged more than six percent by the close, continuing a sharp rally after China last week unveiled a raft of measures to boost its economy, particularly the troubled property sector.

Markets were closed in Shanghai and Shenzhen for a week-long holiday, having also zoomed higher before the break. Tokyo fell more than two percent.

Both main crude contracts shot up more than three percent after surging five percent at one point Tuesday.

That came in the wake of Iran firing dozens of missiles at Israel in response to the killings of Tehran-backed group leaders.

'Further escalation'

Israel vowed it would make Iran "pay" for the launch, raising traders' fears of shocks to crude oil supplies.

"With Israel now expected to retaliate, the chances of further escalation are high, prompting a pivot in (oil) market sentiment from concerns over excess supply to fears of shortages," said Ricardo Evangelista, senior analyst at ActivTrades.

All three main indices on Wall Street ended Tuesday in the red, with the Nasdaq down more than one percent.

Property developers led the surge in Hong Kong on Wednesday, with Agile Group rocketing 160 percent higher and Sunac China Holdings up more than 75 percent.

However, the firms were still at just a fraction of their prices three years ago.

"We have seen strength for property stocks, highlighting growing confidence in a sector that will need to be the backbone of any recovery for the Chinese economy," said Joshua Mahony, chief market analyst at Scope Markets.

"Markets clearly view the... stimulus measures as an indication that we could finally see the country turn a corner," he added.

Dealers are awaiting the release of key US jobs data due Friday, hoping for a fresh idea about the state of the world's biggest economy and the Federal Reserve's plans for borrowing costs after last month's bumper cut.