Zürcher Nachrichten - Oil slides, bonds steady as EU addresses diesel price surge

Markets have been unnerved in recent weeks by fresh multi-year peaks for government bond yields, especially in the United States, as central banks hike interest rates in a bid to cool inflation.

Eurozone inflation surged to 3.8 percent in September, the highest level in three years, as the war in the Middle East fuelled a surge in energy costs, official data showed Friday.

It came with EU nations holding crisis talks following pressure from Donald Trump to tap the bloc's strategic diesel reserves as the president threatens a US ban on diesel exports.

"We fully reject any ban on diesel," European Commission spokeswoman Anna-Kaisa Itkonen said Friday, adding that the EU was ready to work with the International Energy Agency on the possible release of fuel reserves to bring down energy prices.

The prospect of Europe releasing strategic reserves weighed on crude oil prices, with international benchmark Brent North Sea losing 2.4 percent and the main US contract, West Texas Intermediate, shedding 3.7 percent.

"Diesel is now a macro problem as much as an energy one, feeding directly into freight, food, industry, inflation and ultimately bond yields," noted Stephen Innes of SPI Asset Management.

"Strategic stock releases can cool the immediate price shock, but drawing down insurance ahead of winter is hardly a comfortable signal," he added.

In equities trading, Europe rebounded but failed to recover most of its sharp losses Thursday. Asian stock markets mainly closed out the week with losses.

Friday's US non-farm payrolls figures are in focus as traders try to ascertain the Federal Reserve's next move after last month's rate hike.

A below-forecast read on the bank's preferred measure of US inflation this week helped ease concerns for a successive lift on October 28, but a strong jobs read could strengthen the case for such a move.

"Overall, today's payrolls number is likely to seal the deal on the Fed's decision at the October meeting," said Kathleen Brooks, research director at XTB.

"It will also have an impact on the direction of major asset prices as we start a new month."

- Key figures at around 1045 GMT -

Brent North Sea Crude: DOWN 2.4 percent at $99.92 per barrel

West Texas Intermediate: DOWN 3.7 percent at $89.40 per barrel

London - FTSE 100: UP 0.4 percent at 10,470.07 points

Paris - CAC 40: UP 0.8 percent at 7,899.15

Frankfurt - DAX: UP 1.2 percent at 25,226.95

Tokyo - Nikkei 225: DOWN 0.9 percent at 68,309.46 (close)

Hong Kong - Hang Seng Index: DOWN 2.6 percent at 23,972.29 (close)

Shanghai - Composite: Closed for a holiday

New York - Dow: FLAT at 50,926.56 (close)

Euro/dollar: DOWN at $1.1238 from $1.1245 on Thursday

Pound/dollar: UP at $1.3207 from $1.3196

Dollar/yen: DOWN at 157.72 yen from 158.06 yen

Euro/pound: DOWN at 85.09 pence from 85.18 pence

burs-bcp/rh

W.F.Portman--NZN