European stocks have shrugged off renewed hostilities between Iran and the United States as oil prices edged up, with investors also focused on upcoming US inflation data that could influence the rates outlook.
The pan-European STOXX 600 index rose 0.1 per cent on Wednesday, with gains across most sectors.
That was in contrast with a loss of 2.3 per cent for MSCI's broadest index of Asia-Pacific shares outside Japan, where the tech-heavy South Korean KOSPI lost 4.5 per cent as AI stocks came under pressure.
Iran's Revolutionary Guards said they had carried out missile and drone attacks on US military bases in Jordan, Kuwait and Bahrain in retaliation for American strikes on Iranian targets around the Strait of Hormuz.
The clashes marked one of the biggest outbreaks of hostilities since the two countries agreed to a ceasefire in April.
"It's an ongoing risk, although to a lesser extent," said Fleura Shiyanova, fundamental analyst at Kepler Unigestion in Switzerland, of the Iran war.
"The risks are much more understood than they were at the beginning, but now the question is how long it will last."
Investors were also positioning themselves before US inflation data and other major upcoming events such as the SpaceX IPO, Shiyanova said.
Europe's relative lack of a tech hardware sector has meant it has taken a back seat in the AI-driven rally that has lifted US and Asian stocks, but it has also insulated the region against sharp sell-offs in tech stocks.
Oil prices reacted relatively mildly to the strikes, edging up from seven-week lows touched in the previous session.
Brent futures rose 0.2 per cent to $US91.66 a barrel, while US West Texas Intermediate WTI crude climbed 0.3 per cent to $US88.46.
On Tuesday, US stocks fell as a rebound for tech shares fizzled, with worries over sky-high AI valuations, Middle East tensions and rising rate hike bets dampening appetite for risk.
Wall Street futures were down between 0.3 per cent and 0.5 per cent.
Investors will be looking at US inflation data later on Wednesday to gauge the impact of the war.
A Reuters survey of economists predicts inflation likely increased to 4.2 per cent in the 12 months through May in what would be the largest annual rise since April 2023.
A stronger-than-expected jobs report on Friday increased bets that the Federal Reserve will hike interest rates in 2026.
Traders have now fully priced in a 25 basis point hike in December versus expectations of two rate cuts before the war.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, edged 0.1 per cent lower to 99.87.
The European Central Bank's two-day meeting on monetary policy was also due to start on Wednesday.
The ECB is widely expected to raise interest rates by 25 basis points to combat rising energy costs, though the bigger focus will be on policymakers' remarks on the outlook for monetary policy.
The euro was at $US1.155 while sterling was steady at $US1.338.
In Japan, the yen changed hands at 160.36 per dollar, staying near the 160-level widely seen as a line in the sand for potential official intervention.
Japan's wholesale inflation accelerated in May at the fastest pace in three years as price pressures from the war broadened, data showed on Wednesday, adding to the case for further interest rate hikes by the Bank of Japan.
