Via Financial Times

Donald Trump moved away from a military confrontation with Iran, saying Tehran “appeared to be standing down” after attacking two Iraqi bases hosting US troops in retaliation for the killing of its top general.

Warning that Iran would never acquire a nuclear weapon while he was president, Mr Trump said on Wednesday that he would impose new economic sanctions on Iran. He also called on Nato to become “much more involved in the Middle East process”.

No American or Iraqis were killed in the attack, Mr Trump said, in televised remarks from the White House flanked by top officials including Mike Pence, vice-president; Mike Pompeo, secretary of state; Mark Esper, defence secretary; and Mark Milley, commander of the joint chiefs of staff.

“Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world,” Mr Trump said.

The president’s comments appeared to signal a de-escalation of the crisis in the Middle East sparked by the killing of Qassem Soleimani, whom the US accused of plotting imminent attacks against hundreds of Americans in the region.

The general’s death in a US drone strike in Baghdad led Iraqi lawmakers to call for the expulsion of US troops from the country and prompted a volley of heated rhetoric between Washington and Tehran. Both sides have threatened tit-for-tat measures — although officials from both countries said they did not seek full-blown war. 

Mr Trump previously warned that he would consider a “disproportionate” response and said he had identified 52 targets the US would “hit very fast and very hard” if Tehran retaliated.

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US stocks rallied and oil added to its losses following Mr Trump’s remarks, as investors bet a broader conflict may have been averted.

Wall Street’s S&P 500 jumped 0.7 per cent to trade at a record intraday high. Brent crude was down more than 3 per cent at $66.14 a barrel.

Gold, a safe haven for investors during times of turmoil, was down 1.3 per cent.

Additional reporting by Matthew Rocco in New York