NEW YORK, May 16, 2026 (BSS/AFP) - Global stocks slumped and oil prices rose Friday with worries about sustained inflation driving up bond yields with no conclusion to the Iran war in sight. The international oil benchmark Brent crude contract rose more than three percent to $109.26 a barrel. On Wall Street, both the S&P 500 and Nasdaq Composite slumped from fresh all-time highs set Thursday. The Dow was down around one percent. The dollar firmed against the British pound, the euro and the yen. The London, Paris and Frankfurt stock markets all ended the day with losses of more than 1.5 percent. "It's been a strong, strong rally and there are some valid reasons for a pause," said Angelo Kourkafas of Edward Jones. "Today the catalyst is really the rally in bond yields, bond markets are under pressure as oil prices rise. There are some growing worries about government debt as countries potentially look to cushion the impact of higher energy prices via some consumer support." Rising crude futures also pushed up government bond yields, including in Britain, where Prime Minister Keir Starmer faced fresh threats to his leadership. The yield on 30-year UK government bonds reached 5.869 percent, surpassing Tuesday's mark to hit its highest level since 1998, as investors demanded higher returns to reflect growing inflation risks. In Japan, the 30-year bond rate hit four percent for the first time since 1999. "The equity markets have been supported by fast-rising corporate profits and all the AI investments, while bond performance has been reflecting the concerns around energy and inflation," said Kourkafas. Investors were left disappointed as a highly anticipated summit between US President Donald Trump and Chinese leader Xi Jinping in Beijing failed to deliver major breakthroughs on the Middle East war or trade relations. Washington and Beijing both said trade agreements had been made, but no details were shared. Trump told Fox News that Beijing had voiced interest in buying US oil and soybeans. He also said he did not bring up the issue of tariffs -- on pause since October -- during the summit. China's top diplomat later said the two countries had agreed to continue implementing "all" agreements previously reached and to establish councils for trade and investment. "The meeting... was big on warm words and symbolism but not outcomes," said Susannah Streeter, chief investment strategist at Wealth Club. "With diplomatic efforts aimed at resolving the Middle East conflict in limbo, fresh uncertainty has flooded in," she added. The White House said the leaders had "agreed that the Strait of Hormuz must remain open to support the free flow of energy." But investors had hoped for more progress toward reopening the crucial strait, where oil tanker traffic has ground to a near standstill since the outbreak of the war, sending energy prices soaring. Trump also told Fox News on Thursday that he was "not going to be much more patient" with Iran. "Stalled US-Iran diplomacy keeps supply fears firmly in focus," said Matt Britzman, senior equity analyst at Hargreaves Lansdown. "Even if resolved next month, the oil market could remain undersupplied through October, keeping inflationary pressures high and adding another headache for consumers, central banks, and, eventually, investors," he added. In Asia, Tokyo stocks closed two percent lower, while Hong Kong and Shanghai fell more than one percent. - Key figures at around 2000 GMT - Brent North Sea Crude: UP 3.4 percent at $109.26 a barrel West Texas Intermediate: UP 4.2 percent at $105.42 a barrel New York - DOW: DOWN 1.1 percent at 49,526.17 points (close) New York - S&P 500: DOWN 1.2 percent at 7,408.50 (close) New York - Nasdaq Composite: DOWN 1.5 percent at 26,225.14 (close) London - FTSE 100: DOWN 1.7 percent at 10,195.37 (close) Paris - CAC 40: DOWN 1.6 percent at 7,952.55 (close) Frankfurt - DAX 30: DOWN 2.1 percent at 23,950.57 (close) Tokyo - Nikkei 225: DOWN 2.0 percent at 61,409.29 (close) Hong Kong - Hang Seng Index: DOWN 1.6 percent at 25,962.73 (close) Shanghai - Composite: DOWN 1.0 percent at 4,135.39 (close) Pound/dollar: DOWN at $1.3316 from $1.3400 Euro/dollar: DOWN at 1.1620 from $1.1673 on Thursday Dollar/yen: UP at 158.78 yen from 158.33 yen Euro/pound: UP at 87.25 pence from 87.09 pence