Arizona Tribune - Oil prices surge following Trump's Iran tariff threat

"Supply concerns remained front and centre after President Trump announced new tariffs on US imports from any countries trading with Iran, raising fears of further disruptions from one of OPEC's largest producers," said David Morrison, senior market analyst at Trade Nation, a financial services provider.

"Iran's domestic unrest, alongside escalating rhetoric around potential military action, added to the geopolitical premium," he said.

Trump said in a social media post on Monday that the new levies would "immediately" hit the Islamic republic's trading partners who also do business with the United States.

The move "is likely to hit its biggest trading partners like China", said Victoria Scholar, head of investment at Interactive Investor.

New York stocks moved lower, coming off Monday's record levels, despite a US consumer price reading that suggested inflation is easing.

Annual consumer price inflation held steady at 2.7 percent last month, which analysts believe is not enough to prompt the Federal Reserve bank into an early rate easing.

"We're beginning to see inflation retreat," said Bret Kenwell, US investment analyst at the eToro trading platform.

"December's in-line CPI report may not be enough to move the Fed's view toward a more aggressive rate-cutting policy. But as a cooling jobs environment persists, inflation may not be as much of a constraint when it comes to interest rate policy," he said.

Investors meanwhile mostly shrugged off worries about a US criminal probe of the Federal Reserve that comes amid heavy Trump pressure on Fed chair Jerome Powell to cut rates aggressively.

The heads of major central banks threw their support behind the Fed and Powell on Tuesday, saying in a joint statement that it was "critical to preserve" their independence.

European stock markets finished the day little changed.

Earlier Tuesday, Tokyo equities closed at a record high and the yen fell on speculation over a snap election in Japan which would allow Prime Minister Sanae Takaichi to capitalise on strong poll numbers.

Takaichi was appointed Japan's first woman prime minister in October and her cabinet enjoys an approval rating of around 70 percent.

Seoul climbed 1.5 percent after South Korean chip giant SK hynix said it would spend 19 trillion won ($12.9 billion) building an advanced chip packaging plant, as the firm rides the global AI boom.

Gold and silver set record highs for the second day in a row as investors sought refuge from geopolitical uncertainty.

- Key figures at around 1630 GMT -

Brent North Sea Crude: UP 2.9 percent at $65.75 per barrel

West Texas Intermediate: UP 3.1 percent at $61.32 per barrel

New York - Dow: DOWN 0.6 percent at 49,278.03 points

New York - S&P 500: DOWN 0.3 percent at 6,958.63

New York - Nasdaq Composite: DOWN 0.2 percent at 23,690.92

London - FTSE 100: FLAT at 10,137.35 (close)

Paris - CAC 40: DOWN 0.1 percent at 8,347.20 (close)

Frankfurt - DAX: UP less than 0.1 percent at 25,420.66 (close)

Hong Kong - Hang Seng Index: UP 0.9 percent at 26,848.47 (close)

Shanghai - Composite: DOWN 0.6 percent at 4,138.76 (close)

Tokyo - Nikkei 225: UP 3.1 percent at 53,549.16 (close)

Euro/dollar: DOWN at $1.1639 from $1.1666 on Monday

Pound/dollar: DOWN at $1.3430 from $1.3466

Dollar/yen: UP at 159.17 yen from 158.17 yen

Euro/pound: UP at 86.67 pence from 86.63 pence

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T.Sanchez--AT