Arizona Tribune - t iOil soars as Hamas attack on Israel sparks war

Benchmark oil contracts Brent and WTI soared more than five percent in early Asian deals before easing back slightly, recovering some of the past week's dip.

The worsening crisis sent shockwaves through global equity markets, although energy companies were boosted by higher oil prices which lift their profits and revenues.

The dollar, yen and Swiss franc, as well as gold, won strong support as they benefited from their status as a haven investment in times of heightened geopolitical turmoil.

But a number of airlines saw their shares take a large hit with a slew having suspended Israel-bound services for the time being.

Air France-KLM slumped 8 percent while IAG, owner of British Airways, Iberia, Vueling and Aer Lingus, brought up the rear on the London market with a 6 percent nosedive as Germany's Lufthansa dropped 4.3 percent. Lowcost carrier Easyjet similarly saw its market wings clipped.

"The surprise attack by Hamas has fueled concerns about further instability in the Middle East which could in turn disrupt oil flows at a time when the market is already extremely tight and prices are high," said Craig Erlam, senior market analyst with OANDA.

For Stone X analyst Fawad Razaqzada, with markets now in "risk off" mode, "investors are worried that the retaliation by Israel is going to be -– as it has already -– severe and will raise the tensions between Israel and many other countries around the region, including, of course, Iran."

Wall Street and main European equity markets held their nerve, however, with the Dow flat two hours into the trading session while the tech-heavy Nasdaq shed around half of one percent.

London equities were aided by strong gains for oil giants BP and Shell, though the FTSE-100 index ended flat while Paris and Frankfurt gave up just over half of one percent.

Wall Street had rallied Friday on data showing a forecast-busting jump in new jobs but a slowdown in wage growth.

The Mideast crisis has fanned concerns about crucial supplies at a time when supply worries are already high owing to output cuts by Saudi Arabia and Russia.

It has also renewed fears about the impact on inflation, with energy costs a key driver of spiking prices, giving a fresh headache to central banks as they try to ease up on interest rate hikes to avoid recessions.

- Warnings of conflict spreading -

The surprise attack and Israel's declaration of war in response to it have left more than 1,200 dead and raised concerns that a potential broadening of the conflict could draw in the United States and Iran.

Israeli Defence Minister Yoav Gallant on Monday ordered a "complete siege" on the Gaza Strip as the military pounded the Palestinian territory with air strikes.

The Kremlin warned there was a "high risk" of a third party entering the war, after Washington pledged "rock solid" support for Israel and said it was moving warships closer.

"The shocking attacks in Israel have sent the price of oil soaring, as investors assess the potential for the conflict to disrupt supply in the Middle East, if other countries are drawn in," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

The Bank of Israel launched the sale of up to $30 billion in foreign currency reserves, as it sought to curb volatility in its shekel currency has tumbled to a seven-year low against the dollar.

- Key figures around 1545 GMT -

Brent North Sea crude: UP 4.0 percent at $87.96 per barrel

West Texas Intermediate: UP 4.1 percent at $86.20 per barrel

New York - Dow: DOWN 0.1 percent at 33,391.09 points

London - FTSE 100: FLAT at 7,492.21 (close)

Frankfurt - DAX: DOWN 0.7 percent at 15,128.11 (close)

Paris - CAC 40: DOWN 0.6 percent at 7,021.40 (close)

EURO STOXX 50: DOWN 0.8 percent at 4,109.88

Hong Kong - Hang Seng Index: UP 0.2 percent at 17,517.40 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,096.92 (close)

Euro/dollar: DOWN at $1.0548 from $1.0586 on Friday

Dollar/yen: DOWN at 148.68 yen from 149.32 yen

Pound/dollar: DOWN at $1.2215 from $1.2237

Euro/pound: DOWN at 86.35 pence from 86.50 pence

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A.O.Scott--AT