Europe stocks up, oil dips as Mideast worries in check

Marc JonesReuters
US stock futures ticked higher as results from major US banks failed to impress. (AP PHOTO)
Camera IconUS stock futures ticked higher as results from major US banks failed to impress. (AP PHOTO) Credit: AP

Europe's main share and currency markets have started the week modestly higher while oil and bond prices dipped as investors kept Middle East concerns in check after Iran's attacks on Israel.

Tehran's weekend offensive involved more than 300 missiles and drones, and was the first on Israel from another country in more than three decades, but having sold off sharply on Friday and with major powers urging restraint, Monday's market moves indicated relief.

Oil prices, which have risen 10 per cent as the tensions have built up in the past month, dropped one per cent, Israel's shekel rose one per cent and the pan-European STOXX 600 climbed 0.3 per cent, albeit led by defence stocks.

Gold, which has been hitting record highs for weeks, rose 0.3 per cent but the dollar and the ultra-safe government bonds that money managers often turn to when geopolitical tensions mount were lower.

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Close Brothers Asset Management's chief investment officer Robert Alster said the hope was US and Gulf diplomatic efforts would prevent further serious escalation of the Middle East's troubles.

"There is a general belief (among investors) that it isn't going to escalate," Alster said, highlighting that oil prices had not breached their September highs of $US96 a barrel.

"There has been a tit-for-tat and hopefully now we move on."

This week is another busy one for economic data and company earnings, with the International Monetary Fund's spring meetings getting under way too.

One of those data points is US retail sales later on Monday.

The dollar index, which measures the currency against a basket of six others, was steady at 105.92, just below Friday's five-and-a-half month high of 106.11.

The greenback did, though, scale a fresh 34-year high against the Japanese yen on growing expectations that sticky inflation will keep US interest rates higher for longer and Tokyo has not rushed to intervene in FX markets yet.

US stock futures ticked higher after the heavy sell-off on Wall Street on Friday that had also been fuelled by dwindling rate cut hopes and disappointing bank earnings.

MSCI's broadest index of Asia-Pacific shares outside Japan fell as much as 0.7 per cent overnight, though, as nervousness swept over the region.

Japan's Nikkei slid one per cent, while Australia's S&P/ASX 200 index lost nearly 0.5 per cent.

The threat of open warfare between arch Middle East foes Iran and Israel and dragging in the United States has left the region on tenterhooks.

US President Joe Biden warned Israeli Prime Minister Benjamin Netanyahu the US would not take part in a counteroffensive against Iran.

Israel said "the campaign is not over yet".

Oil prices showed traders had largely priced in a retaliatory attack from Iran, resulting in Brent crude futures peaking at $US92.18 a barrel last week, the highest level since October.

Monday's one per cent drop left Brent back below $US90 and US West Texas Intermediate crude futures at just under $US85, while gold was a touch higher at $US2,351 an ounce.

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