Oil Prices Surge In Wake Of Red Sea Attacks

Oil prices shot up nearly 3% on Monday as more companies suspended shipping through the Red Sea following attacks on vessels by Yemen's Iran-backed Huthi rebels.

Meanwhile US stocks sought to continue last week's rally on expectations that the US Federal Reserve will cut interest rates next year, although it appears to have lost steam in Asia and Europe.

Yemen's Iran-backed Huthi rebels said Monday they had attacked two "Israeli-linked" vessels in the Red Sea, the latest in a flurry of drone and missile strikes on vessels entering the Red Sea, aimed at pressuring Israel over its war with Hamas in the Gaza Strip.

Five major shipping firms, including three of the world's largest, have said they are rerouting their vessels away from the Red Sea. On Monday, British oil giant BP and Taiwan's Evergreen became the latest to suspend transit.

Ships must travel through the Red Sea to use the Suez Canal, a key transit route for cargo and oil.

Investors are also keeping tabs on the Bank of Japan's meeting this week, though speculation it will shift away from a policy of not hiking rates has faded.

Equity indices are still set to end the year on a high after the Fed suggested last week it will begin loosening monetary policy as US data shows inflation coming down and the economy on course for a soft landing.

The Dow and Nasdaq last week hit record highs on Wall Street as tech firms surged, but the buying frenzy slowed Friday as investors took a step back, which analysts said was to be expected after the advances.

The Paris CAC 40 and Frankfurt's DAX indices also hit all-time peaks last week.

"We're into the final furlong and unless there's a big surprise then we're looking at some very healthy gains for the most part in 2023," noted Neil Wilson, chief market analyst at Finalto trading group.

A number of Fed officials lined up last week to douse expectations they will slash rates next year. Some observers have predicted as many as six cuts, but the bank's "dot plot" forecast saw three.

The Bank of Japan's own decision is due Tuesday, and while there has been talk that it is about to shift away from years of ultra-loose policy, analysts do not expect it to do so for a few months.

Officials have kept rates in negative territory and stuck to a policy of controlling bond prices in a bid to boost the economy, but with inflation rising and the yen struggling, they are now said to be shifting.

"The BoJ has little need to rush into making policy changes," said economists at Societe Generale.

"But markets will be watching for any sign."

West Texas Intermediate: UP 2.8 percent at $73.42 per barrel

Brent North Sea crude: UP 2.9 percent at $78.73 per barrel

New York - Dow: UP less than 0.1 percent at 37,337.65 points

London - FTSE 100: UP 0.6 percent at 7,622.81

Paris - CAC 40: DOWN 0.4 percent at 7,569.70

Frankfurt - DAX: DOWN 0.5 percent at 16,671.57

EURO STOXX 50: DOWN 0.5 percent at 4,516.07

Tokyo - Nikkei 225: DOWN 0.6 percent at 32,758.98 (close)

Hong Kong - Hang Seng Index: DOWN 1.0 percent at 16,629.23 (close)

Shanghai - Composite: DOWN 0.4 percent at 2,930.80 (close)