GLOBAL MARKETS-Stocks fall as investors mull AI disruptions, oil prices rise

By Chibuike Oguh

NEW YORK, Feb 27 (Reuters) - Global stocks edged lower on Friday, weighed down by persistent concerns about high valuations and the disruptive force of AI, while the potential for oil supply disruptions due to tensions between the U.S. and Iran lifted crude prices.

Market sentiment has weakened as investors worry about the broader impact of artificial intelligence on technology companies, even after AI chipmaker Nvidia NVDA.O posted better-than-expected results. Shares in Nvidia, the world's most valuable company, were down 3.5%, extending losses from the prior session.

Wall Street ended lower, with the benchmark S&P 500 .SPX dropping 0.43%, the Dow Jones Industrial Average .DJI falling 1.05% and the Nasdaq Composite .IXIC off by 0.92%.

"We're just in a stage in the market cycle where not just the market but that particular industry group - semiconductors, that's up more than 100% in a year - have priced in a lot of good news. And now it's time for a breather," said Talley Leger, chief market strategist at The Wealth Consulting Group.

Semiconductor stocks .SOX lost 1.2%.

"I love semiconductor companies," Leger said. "As a group, the share prices have achieved my return objectives so at this stage I have locked in and protected the gains in these stocks since the April lows."

MSCI's All Country World Index .MIWO00000PUS fell 0.25% on Friday but was up 0.35% for the week and nearly 1.2% in February.

Europe's STOXX 600 .STOXX added 0.11%.

U.S.-IRAN TALKS CONTINUE

Markets were also watching developments in U.S.-Iran nuclear talks as Washington amassed more military resources in the Middle East.

An Omani mediator gave an optimistic summary of the latest negotiations but there were no obvious signs of a breakthrough that could avert potential U.S. strikes. U.S. President Donald Trump on Friday said he was still unhappy with Iran, threatening to use force if necessary to reach an agreement.

The U.S. and Iran plan to resume negotiations after consultations in their countries' capitals, Omani Foreign Minister Sayyid Badr Albusaidi said in a post on X after meetings in Switzerland.

U.S. crude CLc1 rose 2.78% to settle at $67.02 a barrel and Brent LCOc1 settled up 2.45% at $72.48.

In the bond market, the yield on benchmark U.S. 10-year notes US10YT=RR fell 6.3 basis points to 3.96%. The 2-year note US2YT=RR yield fell 6.3 basis points to 3.385%.

In Europe, the yield on the benchmark German 10-year Bunds DE10YT=RR fell 1 basis point to 2.644%.

STARMER FALTERS

Sterling GBP= was down 0.07% at $1.34471 after British Prime Minister Keir Starmer's Labour Party suffered an election defeat in the Greater Manchester area, where it has dominated for almost a century.

Japanese data showed cooling inflation in Tokyo and weaker-than-expected factory output, complicating the case for policy rate increases by the central bank.

The yen pared gains and was down 0.03% at 156.18 against the dollar JPY=.

The dollar index =USD, which measures the greenback against a basket of currencies, was down 0.06% at 97.67. The euro EUR= rose 0.14% to $1.1813 against the dollar.

Spot gold XAU= rose 1.5% to $5,263.59 an ounce. Spot silver XAG= rose 6.1% to $93.74 an ounce.