While safe haven gold pushed higher, the news from CNN appeared to be having little detrimental effect on Asian equities, with most extending the previous day's rally.

European stock markets faltered, however, with the Paris CAC 40 down almost one percent in midday deals.

London fell and the pound strengthened against the dollar after UK inflation data come in well above forecasts in April.

The dollar also lost pace against the euro and yen ahead of an upcoming G7 finance ministers meeting this week, with speculation growing that President Donald Trump is open to a weaker greenback to help US exporters.

"Middle Eastern tensions are driving price action in the commodity space," noted Kathleen Brooks, research director at XTB trading group.

"Israel's threat to strike Iran is causing this uplift," she added.

Investors are keeping tabs also on China-US relations after Beijing hit out at Washington's "bullying" over chip export controls, just over a week after the two sides dialled down trade tensions by temporarily slashing tit-for-tat tariffs.

Both main crude contracts jumped around one percent after CNN reported multiple US officials as saying the government had received intelligence indicating Israel was preparing to target Iranian atomic facilities.

There are fears that such a sharp escalation could tip the Middle East into a war, with tensions already high over Israel's strikes on Gaza.

Trump said last week that "I think we're getting close to maybe doing a deal" on Tehran's nuclear programme and then a day later called on the Islamic republic to "move quickly or something bad is going to happen".

But Iran's supreme leader Ayatollah Ali Khamenei warned Tuesday that nuclear talks with Washington were unlikely to yield any results after four rounds of Omani-mediated nuclear talks with the United States since April 12.

"This is the clearest sign yet of how high the stakes are in the US Iran nuclear talks and the lengths Israel may go to if Iran insists on maintaining its commercial nuclear capabilities," Robert Rennie, at Westpac Banking Corp, said.

"Crude will maintain a risk premium as long as the current talks appear to be going nowhere."

Crude prices have risen around 15 percent since the start of the month on softening worries about the economic outlook as tariff tensions grow relatively calmer.

- Key figures at around 1030 GMT -

Brent North Sea Crude: UP 1.0 percent at $66.06 per barrel

West Texas Intermediate: UP 1.1 percent at $62.72 per barrel

London - FTSE 100: DOWN 0.2 percent at 8,768.06 points

Paris - CAC 40: DOWN 0.8 percent at 7,880.58

Frankfurt - DAX: DOWN 0.5 percent at 23,916.99

Tokyo - Nikkei 225: DOWN 0.6 percent at 37,298.98 (close)

Hong Kong - Hang Seng Index: UP 0.6 percent at 23,827.78 (close)

Shanghai - Composite: UP 0.2 percent at 3,387.57 (close)

New York - Dow: DOWN 0.3 percent at 42,677.24 (close)

Euro/dollar: UP at $1.1359 from $1.1284 on Tuesday

Pound/dollar: UP at $1.3438 from $1.3391

Dollar/yen: DOWN at 143.48 yen from 144.47 yen

Euro/pound: UP at 84.53 pence from 84.26 pence

dan-bcp/ajb/lth

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