Oil prices jumped and stocks mostly fell on Tuesday after President Donald Trump abruptly left the G7 talks and fears grew over possible US intervention in the war between Israel and Iran, AFP reported.

Investors' optimism from the previous day that the conflict would not spread across the Middle East gave way to fears of further escalation as fighting entered its fifth day.

“Tensions in the Middle East show no signs of abating, putting investors on high alert,” said Russ Mould, investment director at AJ Bell.

Trump said he was seeking a “real end” to the conflict, not just a ceasefire, after leaving the G7 summit in Canada.

In social media posts, Trump appeared to demand “UNCONDITIONAL SURRENDER!” from Iran, while hinting at possible US intervention to help Israel.

After spending all of Monday in positive territory, US indices were in the red throughout Tuesday's session. The S&P 500 ended with a 0.8% decline.

The sell-off was fueled by a disappointing US retail sales report, which showed that shoppers pulled back in May after rushing to buy ahead of tariffs in previous months.

European stocks ended the day lower, while results in Asia were mixed: Hong Kong fell, Shanghai remained unchanged, and Tokyo rose.

Despite growing calls for de-escalation, neither side has backed down from the missile strikes that began on Friday, when Israel targeted Iranian nuclear and military facilities.

Oil prices jumped more than 4% on Tuesday after fluctuating between gains and losses following Friday's initial surge.

Analysts said the oil market is currently “sufficiently supplied,” as Commerzbank said in a note.

However, the conflict between Iran and Israel has strained the oil market due to the importance of the Strait of Hormuz, through which approximately one-fifth of the world's oil supplies pass, according to Commerzbank's note.

Investors are awaiting the US Federal Reserve's decision on Wednesday, with policymakers expected to keep interest rates steady.

Dealers also kept an eye on the G7 summit, where world leaders opposed Trump's trade war, saying it was a risk to global economic stability.

The UK, Canada, Italy, Japan, Germany, and France called on Trump to change course on his plans to impose even higher tariffs on countries around the world next month.

“Trump's early departure from the meeting means that the prospects for further deals look slim in the coming days,” said City Index and FOREX.com analyst Fawad Razaqzada.

The dollar jumped against the euro and other currencies, evidence of a renewed flight to safety among traders due to uncertainty in the Middle East. I BGNES