Today's Edition
LONDON/SYDNEY (REUTERS)
World shares slipped on Monday and oil prices briefly hit five-month highs before retracing gains as investors awaited possible retaliation from Iran following US attacks on its nuclear sites, with fallout risks to global trade and inflation.
Markets remained restrained, with the dollar getting a modest safe-haven bid and no sign of a rush to bonds. Oil prices were up just 0.4%, after rising as much as 5.7% overnight.
European shares fell on Monday with the pan-European STOXX 600 index down 0.2%.
Analysts at JPMorgan cautioned that past episodes of conflict in the region typically resulted in oil prices spiking by as much as 76% and averaging a 30% rise over time.
Goldman Sachs warned prices could temporarily touch $110 a barrel should the critical Hormuz Strait be closed for a month.
For now, Brent and U.S. crude were both up 0.4% at $77.32 and $74.10 a barrel, respectively. Gold also remained mostly steady at $3,365 an ounce.
World share markets looked moderately resilient, with S&P 500 futures and Nasdaq futures both up 0.2%.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9%, dragged down by shares in Taiwan which closed 1.42% lower, while Chinese blue chips closed higher 0.3% and Japan's Nikkei eased 0.1%.
Japan's manufacturing activity data on Monday showed a return to growth in June after nearly a year of contraction, but demand conditions remain.
The dollar firmed 1.25% against the yen and was last at 147.885, at its highest since May 15, while the euro dipped 0.2% to $1.1497. The dollar index firmed marginally to 99.339.
There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising about 2 basis points to 4.389%.
