A look at the day ahead in European and global markets from Rae

Wee

Market sentiment remained fragile on Tuesday even after U.S.

President Donald Trump claimed he had paused a planned attack

against Iran and that there was now a "very good chance" of

reaching a deal limiting Tehran's nuclear programme.

That sent oil prices falling, though at around $110 a

barrel, they remain more than 50% above their levels prior to

the Middle East war.

Stocks were in a sombre mood, with Asian shares sliding and

U.S. futures surrendering earlier gains, while European futures

edged just a touch higher.

South Korea's high-flying Kospi index fell more than

4%, which analysts attributed to profit-taking.

Much will be riding on artificial intelligence darling

Nvidia's ( NVDA ) results on Wednesday, where expectations are

sky-high for the world's most valuable company.

Ahead of that, UK jobs data is due later on Tuesday.

With the Iran war nearing its third month, investors are

waking up to the worry that the conflict may deliver a lasting

inflationary shock, with sovereign bond yields racing to decade

highs and threatening a severe hit to the spending power of

governments, businesses and households.

G7 finance ministers acknowledged mounting concern over

public debt and bond market volatility as they met in Paris on

Monday and sought common ground on tackling global economic

tensions and coordinating critical raw material supplies.

The bond selloff abated in Asia on Tuesday, with U.S.

Treasury yields and Japanese government bond yields easing, but

not far from milestone highs.

The average rate at which governments in the G7 nations pay

to borrow for 10 years is approaching 4%, up from around 3.2%

before the war started in late February.

Elsewhere, data on Tuesday showed Japan's economy grew

faster than expected in the first quarter on solid exports and

consumption, though momentum will face a severe test as the full

force of the energy shock from the Iran war filters through

businesses and consumers.

The upbeat numbers did little to help the yen, which was

languishing around the 159 per dollar level, keeping

traders on alert for potential intervention from Japanese

authorities.

In Australia, minutes of the central bank's May board

meeting showed policymakers judged interest rates to be

restrictive after three hikes this year, giving it space to

watch how the war plays out, even though inflation is set to

trend higher and economic growth to slow.

Key developments that could influence markets on Tuesday:

- UK employment data (March)

(Editing by Jamie Freed)