After a week of war, Trump demands Iran's unconditional surrender

US President Donald Trump demanded Iran's "unconditional surrender" on Friday, a dramatic escalation of his demands a week into the war he launched alongside Israel, which could make it more difficult to negotiate a swift end to hostilities.

Trump made the remarks on social media just hours after Iran's president announced that unspecified countries had begun mediation efforts, one of the first signals of any diplomatic initiative to end the conflict.

"There will be no deal with Iran except UNCONDITIONAL SURRENDER!" Trump wrote.

"After that, and the selection of a GREAT ACCEPTABLE Leader(s), we, and many of our wonderful and very brave allies and partners, will work tirelessly to bring Iran back from the brink of destruction, making it economically bigger, better, and stronger than ever before."

The surrender demand, and the likelihood that this would complicate any quick path to ending a conflict that has interrupted global energy supplies, caused immediate shock in financial markets. European share markets, open at the time of Trump's post, suffered a sudden swoon. Wall Street opened sharply lower soon after.

On Thursday Trump had told Reuters in a telephone interview that he was demanding the right to help select Iran's new supreme leader, to replace Ayatollah Ali Khamenei, killed in the war's first day.