Oil surges back up on Russia tensions

Another blistering surge in tech firms helped Hong Kong gain, but other markets were mixed as oil prices increased once more. ©AFP

New York (AFP) - Oil prices soared Thursday on tensions surrounding key producer Russia, while global equities mostly rose as markets digested monetary tightening moves by central banks.

The price of benchmark oil contract, Brent North Sea crude, jumped more than eight percent to race past $100 per barrel after Russia rejected a ruling from the UN's top court to suspend its Ukraine offensive.

"Russia's invasion is still dictating price action...given the country's global importance in terms of supply," Interactive Investor analyst Victoria Scholar told AFP.

The surge in oil prices has added to worries about inflation, prompting a warning Thursday from the OECD that fallout from the conflict could cut global economic growth by over one percentage point in the first year after the invasion.

Despite together only accounting for "about two percent" of the global economy, Russia and Ukraine's importance as exporters of raw material, food and energy mean the conflict's impact is likely to be felt beyond their borders, the OECD grouping of developed economies said.

"If sustained," the impact would produce "a deep recession in Russia" and further increase global consumer price inflation by approximately 2.5 percentage points, it added.

The warning came as Russia's finance ministry said it had carried out interest payments on two foreign bonds, avoiding default for now after it was hit by unprecedented Western sanctions.

Central banks

Central banks were in focus again as the Bank of England (BoE) raised its main interest rate by a quarter point, following the US Federal Reserve's decision to do the same the day before.

The hike, widely anticipated by analysts, was the BoE's third straight rate rise as it battles decades-high UK inflation.

"The global economy faces elevated levels of inflation because of various factors, including from surging energy and commodity prices," said Fawad Razaqzada, analyst at ThinkMarkets.

But US stocks extended a strong rally, with the Dow notching its third straight session of gains over one percent.

Higher oil prices usually weigh on the broader equity market, but stocks continued to benefit from positive momentum, analysts said.

Earlier, London finished 1.2 percent up but the German DAX was off 0.4 percent while Paris edged modestly into the green.

In Asia, Hong Kong's main Hang Seng index closed with another massive gain, adding seven percent as investors pile back in after China's pledge to support markets.

China's top economic official has vowed measures to support beaten-down markets and indicated that a debilitating crackdown on the technology sector was nearing its end.

"The statement addressed so many issues on various fronts, which is really rare," said Ding Shuang at Standard Chartered.