Oil prices rallied and stock markets mostly fell on Tuesday as markets digested the lack of progress towards Middle East peace and awaited a US-China summit.

Iran's chief negotiator said on Tuesday that Washington must accept Tehran's latest peace plan or face failure.

"The longer they drag their feet, the more American taxpayers will pay for it," Mohammad Bagher Ghalibaf said in a post on X.

Trump, on his way towards Beijing, said he expected a "long talk" with counterpart Xi Jinping about Iran.

But the lack of progress means the Strait of Hormuz remained largely closed to tanker traffic. The international benchmark Brent North Sea crude and the main US contract, West Texas Intermediate, both rose more than three percent, to US$107.77 and US$102.18 per barrel, respectively.

Meanwhile, the latest consumer price index data in the United States confirmed that high energy prices are stoking inflation, with the index recording the largest annual gain in nearly three years in April.

CPI rose 3.8 percent year-on-year, up from March's 3.3 percent figure, the US Bureau of Labour Statistics said.

Analysts see the report as dimming the odds for Federal Reserve interest rate cuts this year.

The inflation report weighed on Wall Street stocks throughout the session, but major indices finished well above session lows. The S&P 500 finished at 7,400, down 0.2 percent after earlier losing around one percent.

"The market remains calm," said Mabrouk Chetouane, head of global markets at Natixis, adding that investors believe Washington and Tehran will reach an agreement before too long.

Markets are also optimistic about the upcoming US-China summit, Chetouane said, while noting that any additional tariffs after the meeting would be an unwelcome surprise.

"Stability is essential for the capital markets," he said.

Europe's main stock markets ended the day in the red after losses for some major Asian indices.

In Britain, the yield on the country's 30-year bonds reached 5.814 percent on Tuesday, the highest level since 1998.

The rise in yields reflects political uncertainty as Prime Minister Keir Starmer clings to power.

More than 80 of Labour's 403 members of parliament have now called for Starmer to quit immediately or to set out a timetable for his departure.

On Tuesday, more than 100 Labour members of parliament signed a statement backing their leader, highlighting the deep divisions within the beleaguered ruling party.

The S&P 500 fell 0.2 percent to 7,400, the Nasdaq fell 0.7 percent to 26,088, while the Dow rose 0.1 percent, to 49,760. (AFP)



Edited by Cecil Wong