Oil prices fell sharply on Thursday after US President Donald Trump suggested that the latest American strikes against Iran would likely be short-lived.

The development lifted most equity markets and eased pressure on bond yields, offering some relief to investors. The Japanese yen also extended its gains after a sharp rise the previous day had triggered speculation about possible intervention by authorities.

Global markets have been unsettled since US strikes on Iranian targets in the Strait of Hormuz triggered retaliatory exchanges between Washington and Tehran, sending crude prices up by as much as 10 per cent.

Investors are now awaiting Friday's non-farm payrolls report and next week's consumer price index, both of which could have a significant influence on the Federal Reserve's decision ahead of its September 16 policy meeting.