Oil price surge reignites inflation worries as ECB holds rates

By Marc Jones

LONDON, July 23 (Reuters) - A spike successful lipid prices toward $100 a tube drove Europe's authorities borrowing costs to semipermanent highs connected Thursday arsenic reignited ostentation worries prompted immoderate hawkish signals from the European Central Bank arsenic it held rates steady.

Share markets were besides connected ‌the backmost ft arsenic an net miss from chipmaker STMicroelectronics sent its shares tumbling 15% and aft Google-parent Alphabet plans announced it would ramp ‌up AI spending by different $15 cardinal to $200 cardinal for the year. [.EU]

The main absorption remained connected the renewed surge successful lipid prices - and planetary borrowing costs - pursuing the re-escalation of the Iran war.

The Iran-aligned Houthis ​said connected Thursday they had struck 2 Saudi lipid tankers arsenic portion of a naval blockade connected Saudi Arabia, threatening to make a 2nd chokepoint connected planetary lipid supplies alongside Iran's near-closure of the Strait of Hormuz.

The U.S. subject carried retired a caller circular of strikes connected Iran, marking a 12th successive nighttime of American attacks and prompting further Iranian retaliation.

Brent prices jumped astir 5% to much than $98 a barrel, putting the intelligence $100 threshold good wrong scope again.

Germany's 10-year bund yield, the benchmark for euro portion borrowing costs, ‌also roseate supra 3.2% for the archetypal clip since ⁠2011 — a clip erstwhile lipid was besides connected a teardrop and the bloc's indebtedness situation was astir to interruption retired again too.

"Uncertainty remains precocious and the afloat inflationary interaction of the vigor daze has yet to play out," the ECB said arsenic it ⁠held rates astatine 2.25%, having lifted them successful June.

"The Governing Council is truthful intimately monitoring the strength and duration of the shock, arsenic good arsenic its indirect and second-round effects," the ECB added.

Markets had seen conscionable a one-in-five accidental of different involvement complaint hike astatine this meeting. They do, however, spot a four-in-five accidental of a hike astatine the adjacent 1 ​in ​September.

"The messaging remained unchanged and open," Morgan Stanley's analysts said connected the ECB's argumentation statement. "We support ​our telephone for different complaint hike successful September, if vigor ‌prices stay elevated."

In opposition to Europe's struggles, Asian markets had gained overnight.

The KOSPI surged much than 4% successful Seoul, led by 4.8% and 3.7% respective gains for SK Hynix and Samsung. Tokyo's Nikkei and Hong Kong's Hang Seng besides ticked higher.

But Wall Street futures pointed to a further dip determination aboriginal aft results from Alphabet and Tesla - the archetypal 2 of the alleged "Magnificent Seven" megacap companies to study this play - had failed to impress. [.N]