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Wall Street equities tumbled while Brent oil prices finished above $90 a barrel for the first time since late October as markets took stock of rising political tensions in the Middle East.

After an upbeat morning that saw US stocks rebound, major indices plunged into the red in afternoon trading, finishing sharply lower.

The Dow Jones Industrial Average ended down 1.4 percent at 38,596.98, a drop of about 825 points from its session peak.

That came amid another jump in crude prices, in a market that has found itself "very nervous" about the Middle East, said John Kilduff of Again Capital.

"The market continues to sort out whether or not there is going to be an Iranian response to the attack by Israel" earlier this week in Damascus, Kilduff said.

President Joe Biden meanwhile escalated his criticism of Israel's prosecution of its war on Gaza on Thursday, expressing dismay over civilian casualties in a conversation with Israeli Prime Minister Benjamin Netanyahu.

White House National Security Council spokesman John Kirby said the two leaders also discussed a "very public and very viable, real threat by Iran to Israel's security".

Israeli media reported that several Israeli embassies have been evacuated following a situation assessment.

For the stock market, the rising geopolitical worries come in the context of a "market that's been looking for a reason to sell off" following a strong first quarter, said Art Hogan of B. Riley Financial.

Losses were broad-based with all 11 sectors of the S&P 500 in the red.

An exception was defence-related stocks such as Lockheed Martin, General Dynamics, and Northrop Grumman, which advanced.

Earlier, Frankfurt and London ticked higher and Paris ended the day flat, following a mixed performance in Asia and with Hong Kong and Shanghai shut for holidays.

Gold struck another record peak at $2,304.96 per ounce in Asia, extending its blistering run before pulling back.

Wall Street stocks had opened benignly, with traders pointing to policy remarks Wednesday that signaled the US central bank was still open to interest rate cuts this year.

Friday's focus includes the US non-farm payrolls report, a key indicator for the world's biggest economy.

"Friday's employment figures will shed further light on the state of the underlying US economy and could solidify traders' expectations regarding the timing of the first Fed rate cut," added ActivTrades analyst Ricardo Evangelista.

Key figures around 8:30pm GMT

New York - Dow: DOWN 1.4 percent at 38,596.98 (close)

New York - S&P 500: DOWN 1.2 percent at 5,147.21 (close)

New York - Nasdaq Composite: DOWN 1.4 percent at 16,049.08 (close)

London - FTSE 100: UP 0.5 percent at 7,975.89 (close)

Paris - CAC 40: FLAT at 8,151.55 (close)

Frankfurt - DAX: UP 0.2 percent at 18,403.13 (close)

EURO STOXX 50: FLAT at 5,070.76 (close)

Tokyo - Nikkei 225: UP 0.8 percent at 39,773.14 (close)

Hong Kong - Hang Seng Index: Closed for holidays

Shanghai - Composite: Closed for holidays

Dollar/yen: DOWN at 151.22 yen from 151.70 yen on Wednesday

Euro/dollar: DOWN at $1.0840 from $1.0857

Pound/dollar: UP at $1.2641 from $1.2658

Euro/pound: DOWN at 85.73 pence from 85.76 pence

Brent North Sea Crude: UP 1.5 percent at $90.65 per barrel

West Texas Intermediate: UP 1.4 percent at $85.59 per barrel