Israel and Iran launched multiple rockets at each other for a fourth day (Ahmad GHARABLI)

Stocks rose and oil prices retreated Monday as fears of a wider Middle East conflict eased even as Israel and Iran pounded each other with missiles for a fourth day.

The dollar dipped against the euro and pound, while safe-haven gold declined slightly.

“As things stand, investors seem less fearful than they were going into the weekend of the possibility that the war between Israel and Iran spreads across the Middle East, and beyond,” said David Morrison, senior market analyst at financial services provider Trade Nation.

“It appears that most of the Israeli airstrikes and missile launches avoided the most significant parts of Iran’s energy infrastructure. And so far Iran’s retaliation has done relatively little damage,” he added.

Wall Street’s main stock indices pushed higher, with the broad-based S&P 500 finishing up nearly one percent after spending the entire day in positive territory.

In Europe, London, Paris and Frankfurt all closed the day with gains.

They tracked gains in Asia, where Tokyo closed up 1.3 percent, boosted by a weaker yen, while Hong Kong and Shanghai also advanced.

Israel’s surprise strike against Iranian military and nuclear sites on Friday — killing top commanders and scientists — sent crude prices soaring as much as 13 percent at one point on fears about supplies from the region.

However, concerns over the conflict spreading appeared to have receded, with both main oil contracts declining on Monday.

“Unpleasant as it is to watch two sides trade missiles on a sustained basis, so long as the Straits of Hormuz remain quiescent it is hard to envisage a scenario where Friday’s gains can be sustained,” said Chris Beauchamp, chief market analyst at online trading platform IG.

Analysts said the recent decision by the OPEC+ group of crude producing nations, led by Saudi Arabia and Russia, to raise output again in July also played a role.

“There may need to be a major escalation in the conflict before we get another sharp upswing in oil and gold prices,” said Kathleen Brooks, research director at trading group XTB.

Investors were gearing up for monetary policy decisions this week from the US Federal Reserve, Bank of England and Bank of Japan.

All are expected to hold steady but traders will be keeping a close watch on their statements for clues on interest-rate outlooks, with US officials under pressure from President Donald Trump to cut borrowing costs.

Also in focus is the G7 summit in the Canadian Rockies, which kicked off Sunday, where the Middle East crisis will be discussed along with trade after Trump’s tariff blitz.

Welcome to CNBC’s live blog covering all the action and business news in European financial markets on Thursday.

Futures data from IG suggests European markets will open higher, with London’s FTSE 100 looking set to open 0.3% higher at 8,799, Germany’s DAX 0.2% higher at 23,836, France’s CAC 40 also up 0.2% at 7,757 and Italy’s FTSE MIB up 0.15% at 39,926.

The positive start in Europe comes after a more mixed day on Wednesday, particularly for the U.K. where bond prices, as well as the FTSE, tumbled sharply.

Those moves came after U.K. Finance Minister Rachel Reeves appeared visibly upset in Parliament on Wednesday as pressure mounted on the government over welfare reforms. The government said Reeves was dealing with a “personal matter” and Prime Minister Keir Starmer later said she has his full support.

U.S. stock futures were little changed on Wednesday night as traders braced for June’s nonfarm payrolls data. Economists polled by Dow Jones expect that the economy added 110,000 jobs last month. That compares with May’s gain of 139,000. Economists also see the unemployment rate inching higher.

In the Asia-Pacific region overnight, Vietnamese stocks climbed to their highest in over three years as investors awaited further details on the U.S.-Vietnam trade agreement that President Donald Trump announced Wednesday.

The U.S. is imposing a 20% tariff on goods imported from the Southeast Asian nation, while the latter will impose “ZERO Tariff,” Trump said on Truth Social.

— Holly Ellyatt

The US has eased export restrictions on China for chip design software and ethane, a sign that trade tensions are calming between the two countries.

Software firms like Synopsys (SNPS), Cadence (CDNS) and Siemans (SIEGY) said they will now sell their chip design tools to Chinese customers again. The US also removed limits on ethane exports to China that it had set just weeks ago.

President Trump on Wednesday said he had reached a trade deal with Vietnam, one week ahead of a July 9 deadline for tariffs to snap back to higher levels for US partners.

Trump said Vietnam’s goods imported to the US would face a 20% tariff, lower than the 46% tariff he had levied as part of his “Liberation Day” plans but higher than the blanket 10% tariff currently in effect. He also said Vietnamese goods would face a higher 40% tariff “on any transshipping” — when goods shipped from Vietnam originate from another country, like China.

Trump said that US goods exported to Vietnam would not face a tariff.

“In other words, they will ‘OPEN THEIR MARKET TO THE UNITED STATES,'” Trump wrote on Truth Social.

The deal would be the second the US has struck with a trade partner since Trump paused those sky-high “Liberation Day” duties, in addition to a pact with the United Kingdom. The US has also agreed with China on a framework to move toward a larger trade deal.

Trump’s July 9 deadline has come back in focus in recent weeks as more countries struggle to get over the hump. Trump earlier this week said negotiations with Japan had soured, saying he would force Japan to accept higher tariffs of “30%, 35%, or whatever the number is that we determine.” Notably, that proposal is higher than the 24% “Liberation Day” level.

“I’m not sure we’re going to make a deal,” Trump said. “I doubt it with Japan. They’re very tough. You have to understand, they’re very spoiled.”

With Japan as his jumping-off point, Trump renewed threats that he may stick to his self-imposed July 9 deadline for making trade deals and issue new tariff levels to trading partners, forgoing another pause to “Liberation Day” duties.

“I’ll be writing letters to a lot of countries,” he said.

Meanwhile, the European Union has signaled it was willing to accept a 10% universal tariff on many of its exports but is seeking exemptions for pharmaceuticals, alcohol, semiconductors, and commercial aircraft as part of a trade deal.

On the North American front, Canada has scrapped its digital services tax that was set to affect large US technology companies. The White House said trade talks between the two countries had resumed after Trump threatened to cut off trade talks.

From 13 Jan 2025 14.15 GMT Government bond yields reverse earlier increases Some calm has returned to bond markets, with yields – or interest rates – reversing the rises seen earlier in the day. The yield on the 30-year UK government bond is now roughly flat at 5.41%, after rising by 6 basis points this morning to 5.472%, the highest since 1998. The 10-year yield is up just one 1bp at 4.85%. In the US, the yield on the 10-year Treasury hit its highest level since November 2023 earlier, but has now edged 1 basis point lower to 4.763%, and the 30-year yield is down by a similar amount. The increase in UK borrowing costs in recent days has piled pressure on the chancellor, Rachel Reeves, who could be forced to adjust her tax and spending plans, or risk breaking fiscal rules. The pound is still down by 0.55%, though, falling to $1.2137, as the dollar is powering ahead against most major currencies, boosted by strong economic data on Friday. The euro is trading 0.36% lower at $1.0206. Stocks are also heading lower. The UK’s FTSE 100 index has lost 53 points to 8,194, a 0.65% decline. The German and French indices are around 0.6% lower while the Italian market has slid by 1.2%. Share Updated at 14.26 GMT

13 Jan 2025 15.08 GMT The Bank of England has just sold £750m of gilts with a maturity of between three and seven years. It got a bid to cover ratio 2.24, which indicates ok demand (but not great). Share

13 Jan 2025 14.46 GMT Starmer: government will take ‘ruthless approach’ to spending review Andrew Sparrow Over here, economists believe that, with government borrowing costs rising and the Treasury opposed to any futher tax rises, Rachel Reeves will have to announce further cuts later this year to ensure she continues to meet her fiscal rules. During his Q&A this morning, Keir Starmer was asked four times if the economic situation meant further cuts might be needed. Generally, the prime minister refused to engage directly with the suggestion. But he never denied that further cuts were a possibility. He said the government would “absolutely” be sticking to its fiscal rules. And he said the Treasury was right to be “ruthless” as it approached the spending review. In terms of the ruthless approach when it comes to finances and spending, yes, we will be ruthless, as we have been ruthless in the decisions that we’ve taken so far. We’ve got clear fiscal rules, and we’re going to keep to those fiscal rules. Share

13 Jan 2025 14.41 GMT Wall Street falls at the open, Moderna shares plummet On Wall Street, shares have fallen after the opening bell. The Nasdaq fell 251 points, or 1.3%, while the S&P 500 lost 0.8% and the Dow Jones edged 0.1% lower. Moderna shares slumped by 24% after the company cut its outlook because of shrinking demand for its Covid-19 vaccine. Traders have dialled back their bets on further interest rate cuts and at one point, weren’t pricing in even one Fed cut this year. They are now betting on one quarter point reduction by December. David Morrison, senior market analyst at broker Trade Nation, said: The robust labour market, along with the recent pickup in inflation, are both making it difficult for the Federal Reserve to justify further rate cuts. Inflation had already started to creep up again, even as the Fed cut rates by a bumper 50 basis points in September – something that looks like a serious policy mistake, compounded by additional cuts in November and December. Share

13 Jan 2025 14.15 GMT Government bond yields reverse earlier increases Some calm has returned to bond markets, with yields – or interest rates – reversing the rises seen earlier in the day. The yield on the 30-year UK government bond is now roughly flat at 5.41%, after rising by 6 basis points this morning to 5.472%, the highest since 1998. The 10-year yield is up just one 1bp at 4.85%. In the US, the yield on the 10-year Treasury hit its highest level since November 2023 earlier, but has now edged 1 basis point lower to 4.763%, and the 30-year yield is down by a similar amount. The increase in UK borrowing costs in recent days has piled pressure on the chancellor, Rachel Reeves, who could be forced to adjust her tax and spending plans, or risk breaking fiscal rules. The pound is still down by 0.55%, though, falling to $1.2137, as the dollar is powering ahead against most major currencies, boosted by strong economic data on Friday. The euro is trading 0.36% lower at $1.0206. Stocks are also heading lower. The UK’s FTSE 100 index has lost 53 points to 8,194, a 0.65% decline. The German and French indices are around 0.6% lower while the Italian market has slid by 1.2%. Share Updated at 14.26 GMT

13 Jan 2025 12.30 GMT Lib Dems call for emergency meeting with banks to reassure mortgage holders As the cost of government borrowing continues to go up, with 30-year bond yields at a near-30-year high, the Liberal Democrats are calling on the chancellor to hold an emergency summit with banks to reassure mortgage holders that they won’t see a major spike in their mortgage costs. It comes as experts warn that mortgage rates may rise in the coming weeks, as lenders respond to the turmoil in the bond market. Expectations of interest rate cuts from the Bank of England are also being scaled back, with the pound sliding to a fresh 14-month low against the dollar today. This is because the dollar is powering ahead against most major currencies, including the euro, with recent data underscoring the strength of the US economy. Liberal Democrat Treasury spokesperson, Daisy Cooper, said: The chancellor’s budget has not worked and now many will be worried that they will have to pay the price through spiralling mortgage costs. After years of Conservative economic vandalism including their disastrous mini-budget, it is a price that many cannot afford. An emergency summit with the banks must be convened so that mortgage payers can be reassured that they are not going to be subjected to yet another bout of spiralling costs. Rachel Reeves can no longer sit on her hands as this turmoil threatens to have real consequences for millions of homeowners. Share

13 Jan 2025 12.25 GMT UK’s Starmer: Reeves doing a ‘fantastic job’ Keir Starmer has said that Rachel Reeves, the chancellor, is doing a “fantastic” job and has his full confidence. She is under mounting pressure following a sharp rise in UK borrowing costs and a decline in the value of the pound. Talking about the government’s AI drive, the prime minister also faced questions about the economy. Rachel Reeves is doing a fantastic job. She has my full confidence. She has the full confidence of the entire party. She was given incredibly challenging tasks. View image in fullscreen PM Keir Starmer gives speech for AI plan. Photograph: BBC Share Updated at 14.43 GMT

13 Jan 2025 11.41 GMT Steve Hare, chief executive of the software firm Sage, said: The UK government’s ‘AI Action Plan’ represents an important step forward in boosting the country’s AI sector. While building better infrastructure and attracting top-tier talent is vital, success hinges on making AI accessible to all—especially the 99% of UK businesses that are SMBs [small and mid-size businesses]. At Sage, we know 75% of SMBs are thinking about investing in AI this year. As prime minister Keir Starmer said, AI can transform their record keeping and planning. The potential is huge, but turning intent into action requires government support through a comprehensive digital adoption and data strategy that fosters an innovation-friendly environment. When SMBs fully embrace AI, the benefits—productivity, innovation, growth—will ripple across the entire economy. Share

13 Jan 2025 11.34 GMT Petrol prices rise on back of higher oil prices – AA Brent crude has gone back above $80 again, currently trading at $81.26 a barrel, $1.50 higher on the day. The last time it was above $80 was a short-term spike in October, and for a longer period during the summer. On Friday, the wholesale cost of petrol had risen 3p a litre since Christmas and diesel had gone up by 5p, according to the AA motoring group. If sustained, that would lead to a £1.65 increase to the cost of filling the typical petrol tank and £2.75 for diesel. Petrol averaged 137.2p a litre over the weekend. In October, it had dropped below 134p a litre before starting to rise again. Diesel is back up to an average of 143.7p a litre, having been as low as 138.4p in October. Luke Bosdet, the AA’s spokesman on pump prices, said: Freezing temperatures and rising pump prices are a bad start to 2025 for drivers. Their vehicles are consuming more fuel due to engines having to work harder in winter conditions and any weakness in the pound won’t help because oil and fuel commodities are traded in dollars. We will be watching carefully to see the extent the fuel trade takes advantage of upward costs. What happened heading into winter didn’t fill drivers with confidence. View image in fullscreen Person Woman Filling Her Car With Unleaded Petrol Fuel Photograph: Kevin Wheal/Alamy Share

13 Jan 2025 11.29 GMT Consumer confidence bounces in December – YouGov/CEBR Phillip Inman Consumer confidence bounced in December as the impact of inflation-busting wage rises and the prospect of rising house prices lifted sentiment –- giving a boost to Rachel Reeves amid market turmoil that has pushed the pound to a 14-month low. A monthly survey by YouGov and the Centre for Economics and Business Research (CEBR) found that an index of consumer confidence improved by 1.3 points to 112.2 last month, to give the highest score since August 2021 (112.9). Workers who responded to the poll reported an improved outlook for their household finances. Workers said there were “significant gains in business activity over the previous 30 days (+3.0) and they were looking forward to year ahead (+1.5), revealing a more buoyant economy in the run up to Christmas than seen in the months immediately before and after Reeves’s October budget. Homeowners were more likely to say the outlook for property values had improved – up by 2.9 points to 119.2. However, Sam Miley, the CEBR’s managing economist said the improved mood among workers may be shortlived. The first weeks of 2025 have brought considerable uncertainty, which could impact these metrics moving forward. The outlook for the economy is weakening, amidst expectations of continually high inflation and concern over the potential for further tax rises. Meanwhile, the recent turbulence in government debt markets could hinder any potential reduction in mortgage costs over the coming months, impacting household finances and property prices. Whether consumers can ride out this wave of uncertainty by continuing to express net positivity will be key to the economy’s performance this year. Share

13 Jan 2025 10.20 GMT Ofgem CEO Jonathan Brearley to stay for 5 more years Britain’s energy regulator, Ofgem, has extended Jonathan Brearley’s term as chief executive for five more years, to 31 January 2030. In 2023, Ofgem’s incoming chair Mark McAllister suggested that Blearley could be replaced, after a turbulent few years which caused staff morale to slump and supplier complaints to increase. The regulator admitted in 2022 that British households would have been better off weathering the winter gas crisis if it had acted sooner to crack down on financially unstable energy suppliers. However, today McAllister said: Jonathan has led Ofgem through unprecedented challenges over the past five years: the fallout from Covid-19, energy market turbulence and the price shock following Putin’s invasion of Ukraine. He and his senior team have shown great dedication in stepping up to meet these challenges, whilst establishing the foundations required to create a clean power electricity system to get us to net zero by 2050 – the biggest ever transformation of the energy industry. This has involved developing and executing vital changes in how we plan, build, and supervise the roll out of new energy infrastructure, at a pace not seen for decades, while also reshaping a retail market that can be innovative and dynamic for customers. At the same time, Jonathan has taken tough measures to ensure suppliers meet the high standards consumers rightly expect, while stamping out bad practice wherever it exists. View image in fullscreen Jonathan Brearley, chief executive of Ofgem. Photograph: David Levene/The Guardian Brearley said: The government’s 2030 target for a clean electricity grid is tough but achievable, if everyone plays their part. We have plans in place to get there at the lowest possible cost for consumers and businesses, while unlocking the private investment needed to expand the grid and generate more clean power. Share Updated at 10.38 GMT

13 Jan 2025 10.02 GMT Oil prices jump on supply disruption fears In financial markets, the pound and the euro are continuing to slide against the dollar, which has been boosted by strong economic data, while stock markets are heading lower, and oil prices have jumped. Crude oil prices are rising for a third day, driven by wider US sanctions on Russian oil exports. The new sanctions, announced at the end of last week, include oil producers Gazprom Neft and Surgutneftegaz, as well as 183 vessels that have shipped Russian oil – targeting revenue that Moscow is using to fund its war against Ukraine. This will prompt China and India to source more oil from the Middle East, Africa and the Americas, boosting prices and shipping costs, according to traders and analysts. Tamas Varga, analyst at PVM Oil Associates, told Reuters: There are genuine fears in the market about supply disruption. The worst case scenario for Russian oil is looking like it could be the realistic scenario. But it’s unclear what will happen when Donald Trump takes office next Monday. Brent crude futures rose by more than 2% or $1.68 a barrel to as high as $81.68 a barrel, the highest since August, and is now trading at $80.81 a barrel, up by 1.3%. US West Texas Intermediate crude touched a peak of $78.58 a barrel and is now at $77.69 a barrel, up by 1.5%. Share

13 Jan 2025 09.50 GMT UK low- to middle-income families far poorer than OECD counterparts – study Low- to middle-income families in Britain are far poorer than their counterparts in western Europe because of sky-high housing costs, according to an analysis by the Resolution Foundation. The thinktank said that while prices in the UK were 8% higher than the average in the 38 member countries of the Organisation for Economic Cooperation and Development (OECD), less well-off Britons were more affected by the cost of housing, which is 44% higher in the UK than the OECD average. Higher housing costs in the UK more than offset the benefit of food, another major area of spending for those on lower incomes, being 12% cheaper than the average in those developed countries. When lower-income families’ tendency to spend more on necessities and less on luxuries is factored in, German families are 21% or £2,300 a year better off than their UK equivalents and the gap with Dutch families is even wider, at 39%. UK low- to middle-income families far poorer than OECD counterparts – study Read more Share

13 Jan 2025 09.49 GMT One in six UK workers skipping meals to make ends meet, says TUC As many as one in six workers in Britain are skipping meals to make ends meet as households remain under pressure from the higher cost of groceries, energy and other essentials. Highlighting the impact of the cost of living crisis on working households, figures from the Trades Union Congress (TUC) showed 17% of full- or part-time workers had skipped a meal to reduce their spending in the past three months. According to a survey of more than 2,500 working adults by YouGov in the week before Christmas, carried out on behalf of the trade unions’ umbrella group, as many as one in 10 said they had skipped a meal every day or most days. The Post Office said separately that cash withdrawals at its branches topped £1bn in December, the first time on record that this has happened in a single month, as people relied on cash to manage budgets. About £979m of personal cash withdrawals were made, and £35m of business cash withdrawals. One in six UK workers skipping meals to make ends meet, says TUC Read more Share