Oil prices fall even as Israel-Iran strikes extend into fourth day

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Stocks rose and oil prices pulled back on Monday as fears of a wider Middle East conflict eased even as Israel and Iran pounded each other with missiles for a fourth day.

The dollar and safe-haven gold declined slightly.

"European shares were surprisingly resilient against a backdrop of uncertainty," said Russ Mould, investment director at AJ Bell.

"The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further," he cautioned.

London, Paris and Frankfurt stock markets were all higher in midday trade.

That tracked gains in Asia, where Tokyo closed up 1.3 percent, boosted by a weaker yen, while Hong Kong and Shanghai also advanced.

Israel's surprise strike against Iranian military and nuclear sites on Friday -- killing top commanders and scientists -- sent crude prices soaring as much as 13 percent at one point on fears about supplies from the region.

However, concerns over the conflict spreading appeared to have eased, with both main oil contracts retreating Monday.

"Financial markets are very good at absorbing geopolitical risk, and OPEC+'s supply boost is also helping to cushion the blow," said Kathleen Brooks, research director at trading group XTB.

"There may need to be a major escalation in the conflict before we get another sharp upswing in oil and gold prices," she added.

Analysts had warned that the spike could send inflation surging globally again, dealing a blow to long-running efforts by governments and central banks to get it under control.

Investors were gearing up for monetary policy decisions this week from the US Federal Reserve, Bank of England and Bank of Japan.

All are expected to stand pat but traders will be keeping a close watch on their statements for clues on interest-rate outlooks, with US officials under pressure from President Donald Trump to cut.

There was little major reaction to data showing China's factory output grew slower than expected last month as trade war pressures bit, while retail sales topped forecasts.

Also in focus is the Group of Seven summit in the Canadian Rockies, which kicked off Sunday, where the Middle East crisis will be discussed along with trade after Trump's tariff blitz.

In corporate news, shares in Nippon Steel rose more than three percent in Tokyo after Trump on Friday signed an executive order approving its $14.9 billion merger with US Steel, bringing an end to the long-running saga.

In London, betting company Entain surged 12 percent after it raised the annual revenue forecast for its US-based joint venture, BetMGM.

Shares in Gucci owner Kering climbed over nine percent in Paris on reports that the outgoing boss of French automaker Renault would take over as chief executive of the struggling luxury group.

Renault shares shed around seven percent, following its announcement Sunday that Luca de Meo would step down in July.