London (AFP) - Oil prices slipped for a second day on Tuesday as traders judged the risk of renewed military strikes on Iran to have receded, after the United States instead threatened broader economic sanctions.

Although Treasury Secretary Scott Bessent said the White House was declaring an “economic D-Day” against Iran and its trade partners, the US gave no timeline for its new sanctions and did not name any other countries it would punish.

The measures were softer than analysts had expected and were accompanied by renewed shuttle diplomacy, with key Pakistani mediators reporting positive talks with Iran’s president on Monday.

The news helped calm oil markets, with prices falling around three percent and the international benchmark Brent back below $90 a barrel, following weeks of rising prices caused by deadlock in talks to reopen the Strait of Hormuz.

US indices rose in early trading, matching earlier gains in Europe and Asia. All major European markets closed up, aside from Paris, which slipped back slightly in late trading.

“European stock markets rebounded early Tuesday with some relief evident from the lack of any material increase in the economic pressure on Iran,” said Neil Wilson, investor strategist at Saxo UK.

The general positive performance of Europe’s markets was further helped by German data showing the country’s second-quarter growth was stronger than previously estimated.

However, Sam Stovall of CFRA Research suggested Tuesday’s uptick in stocks on US indexes could be a reaction to a downturn last week.

“If anything, it could simply be a one-day counter-trend rally,” he said.

Any sustained gains, said Stovall, were partly due to optimism around chip giant Nvidia’s earnings, set to be released on Wednesday.

The chipmaker’s performance has become a key test of the AI boom, with concerns growing over whether the sector can match lofty expectations.

“The most actively traded stocks in the US right now are all the major AI names,” said Kathleen Brooks, research director at XTB trading group.

She added that Nvidia’s results “will be a key driver of price action, and potential volatility later this week”.

Investors are also looking to the annual Jackson Hole gathering of central bankers, economists and finance chiefs beginning Thursday, where Federal Reserve boss Kevin Warsh is due to speak.

His comments will be parsed for clues about monetary policy, with US inflation still stubbornly high and after Bessent said the Treasury would buy back more of its own bonds to push down borrowing costs after the 30-year yield hit a 19-year high.

The move has weighed on the dollar and helped lift bitcoin briefly above $80,000 for the first time since May, with the prospect of crypto-friendly US legislation also providing support.

The Canadian dollar edged lower against the US dollar after US President Donald Trump vowed to double tariffs on Canadian vehicles, fanning a trade war.

Trump’s threat comes after the neighbours failed to reach a deal to avert new 50 percent US tariffs on select Canadian goods.

Canada on Tuesday announced counter-tariffs on US goods ranging between 15 and 50 percent.

- Key figures at around 1535 GMT -

Brent North Sea Crude: DOWN 3.1 percent at $87.77 per barrel

West Texas Intermediate: DOWN 3.1 percent at $82.36 per barrel

New York - DOW: UP 0.1 percent at 53,453.83 points

New York - S&P 500: UP 0.2 percent at 7,670.77

New York - Nasdaq: UP 0.6 percent at 26,129.33

London - FTSE 100: UP 0.3 percent at 10,886.16 points (close)

Paris - CAC 40: DOWN 0.2 percent at 8,438.20 (close)

Frankfurt - DAX: UP 0.6 percent at 26,266.14 (close)

Tokyo - Nikkei 225: UP 0.5 percent at 65,856.43 (close)

Hong Kong - Hang Seng Index: FLAT at 25,511.10 (close)

Shanghai - Composite: UP 0.2 percent at 3,889.44 (close)

New York - DOW: UP 0.3 percent at 53,417.16 (close)

Euro/dollar: UP at $1.1675 from $1.1663

Pound/dollar: UP at $1.3636 from $1.3629

Euro/pound: UP at 85.62 pence from 85.57 pence

Dollar/yen: UP at 159.22 yen from 159.15 yen on Monday

burs-jxb/rmb