Global shares skid after attacks on Gulf shipping, Iran warnings

BOSTON/LONDON, March 12 (Reuters): Global shares fell on Thursday as attacks on oil tankers in the Gulf and a warning from Iran shattered prospects of an imminent de-escalation in the Middle East conflict, briefly pushing oil prices above $100 a barrel and stoking fresh inflation concerns.

Wall Street's stock indexes slumped. In early trading, the Dow Jones Industrial Average fell 1.2%, the S&P 500 dropped 1%, and the Nasdaq Composite lost 1.3%.

The STOXX 600 pan-European equity benchmark slipped 0.6%. The MSCI All-World index fell nearly 1%.

The International Energy Agency's plan to release 400 million barrels of oil from its reserves, announced on Wednesday in the largest such move in its history, failed to soothe investors.

Brent crude futures jumped as much as 10.4% to $101.59 a barrel, before trimming gains, as doubts persisted over whether reserve releases would be enough to cushion the hit from the Middle East supply shock.

Iran will avenge the blood of its martyrs, keep the Strait of Hormuz closed and attack US bases, new Supreme Leader Mojtaba Khamenei said on Thursday in a statement read out on state television, his first remarks since succeeding his slain father.

Earlier, two fuel tankers in Iraqi waters were struck by explosive-laden Iranian boats, Iraqi security officials said early on Thursday, while an Iraqi official told state media that its oil ports "have completely stopped operations."

"The market remains very concerned in terms of what's going on in the Strait of Hormuz, and basically, information that we are getting over the last 24 hours is not a good reading," said Rodrigo Catril, a senior FX strategist at NAB.

Iran had earlier stepped up attacks on merchant ships in the Strait of Hormuz, increasing the number of ships struck in the region since fighting began to at least 16. Tehran has warned the world to get ready for oil at $200 a barrel, although US Energy Secretary Chris Wright said on Thursday global oil prices are unlikely to hit that price.

Data on Wednesday showed the US consumer price index rose 0.3% in February, in line with forecasts and above January's 0.2% increase. The report, however, was not regarded as particularly relevant given that the Iran war has started to fuel inflation.

In bond markets, the risk of rising inflation outweighed safe-haven considerations to push yields higher globally. Yields on 10-year Treasury notes rose 2.8 basis points to 4.234%, having jumped 7 bps overnight.

The US Federal Reserve will cut interest rates for the first time this year in June, according to economists polled by Reuters. Nearly 40% of economists expect just the one rate reduction or none this year, almost double the share predicting three or more.

Nervous investors sought the liquidity of dollars while shunning currencies from countries that are net energy importers, including Japan and much of Europe.