Updates post market open

By Jaspreet Kalra

MUMBAI, May 11 (Reuters) - A jump in crude oil prices after U.S.-Iran peace talks hit a stalemate and Indian Prime Minister Narendra Modi's urging of citizens to conserve foreign exchange spooked currency traders on Monday, sending the rupee past 95 per dollar, which drew likely market intervention by the central bank.

Indian assets were under pressure across the board with the rupee INR=IN down 0.75% at 95.1850 per dollar while the benchmark equity index Nifty 50 .NSEI fell over 1% and the yield on the 10-year benchmark note rose 5 basis points to 7.03%.

The renewed pressure on Indian markets came after U.S. President Donald Trump on Sunday rejected Iran's response to a U.S. proposal for peace talks to end the war, saying Tehran's demands were "totally unacceptable."

Brent oil futures LCOc1 jumped 4% in Asian trade to $105.7 a barrel. Higher oil prices are a major risk for net energy importer India and threaten to widen the country's current account deficit, slow growth and stoke inflation.

Over the weekend, Prime Minister Modi urged a ‌spate of measures including fuel conservation, fewer imports, as well as reduced travel as a surge in energy ​prices takes a toll on the country's foreign exchange ​reserves.

On Monday, traders pointed to dollar sales from state-run banks that were likely on the Reserve Bank of India's behalf, intended to cushion the rupee's decline.

State-run banks were selling dollars but have not been persistent, which could open room for further losses later in the session, a trader with a Mumbai-based bank said.

Since the Iran war broke out in late February, the rupee has declined over 4% and the Nifty 50 has fallen 5%, accompanied by a near 40 bp rise in India's 10-year sovereign bond yield.

Asian currencies were down between 0.3% to 1% on the day.

"As energy-related disruptions linger, rising risks of fuel shortages could pose a more differentiated challenge ... particularly for economies with relatively low crude inventory buffers. This includes India and several ASEAN markets such as the Philippines, Vietnam, and Indonesia," analysts at MUFG said in a note.