Oil extends rally on Russia sanctions bets, stocks wobble

Oil prices extended gains Tuesday on the prospect of further sanctions on Russia for alleged "atrocities" in some occupied Ukraine cities, while equities struggled to build on a rally in New York and Europe.

European Union officials were discussing new measures against Moscow after reports -- denied by the Kremlin -- that troops had executed civilians.

Among the punishments could be a ban on imports of Russian crude, following a similar move by the United States and Britain.

White House National Security Advisor Jake Sullivan also signalled more US sanctions were on the way this week.

While Europe's economy relies heavily on energy from Russia, the possibility of an embargo sent both main contracts sharply higher Monday, and they continued their rise in Asia, putting on more than one percent.

That pared some of the sharp losses seen Friday in reaction to a pledge by Washington and other major economies to unleash millions of barrels from their stockpiles to keep a lid on prices, which are fanning already high inflation.

It also offset an expected hit to demand in China from lockdowns in parts of the country -- including Shanghai, the biggest city -- sparked by a wave of Omicron outbreaks.

The continued uncertainty caused by the war in Ukraine, and the blow to the global economy it is expected to deal, was unable to prevent another healthy performance on Wall Street, where the Nasdaq's surge led all three main indexes higher.

"Despite all the concerns, equities remain the best bet to achieve returns above today's elevated inflation," said markets strategist Louis Navellier.

However, trade was tepid in Asia, with Hong Kong, Shanghai and Taipei closed for holidays.

Tokyo, Sydney, Singapore, Jakarta and Wellington were slightly up, while Seoul and Manila dropped.

Traders will be keeping a close eye on the release this week of minutes from the Federal Reserve's most recent policy meeting, hoping for an insight into officials' thinking over monetary policy.

After last month's expected 0.25 percentage point interest rate hike, there are increasing bets on a half-point lift in May in light of soaring inflation and strong jobs data that suggest the economy remains robust enough to absorb higher borrowing costs.

And National Australia Bank's Tapas Strickland added: "Profit reporting season in the US kicks off next week and it will be interesting to see how firms are interpreting the tea leaves, and whether earnings guidance is revised down."

- Key figures around 0200 GMT -

Tokyo - Nikkei 225: UP 0.1 percent at 27,756.54

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

Brent North Sea crude: UP 1.7 percent at $109.31 per barrel

West Texas Intermediate: UP 1.7 percent at $105.00 per barrel

Euro/dollar: DOWN at $1.0969 from $1.0978 late Monday

Pound/dollar: UP at $1.3117 from $1.3114

Euro/pound: DOWN at 83.62 pence from 83.65 pence 

Dollar/yen: DOWN at 122.60 yen from 122.78 yen

New York - Dow: UP 0.3 percent at 34,921.88 (close)

London - FTSE 100: UP 0.3 percent at 7,558.92 (close)