Sawt Falasteen - Global stocks mixed as oil surges on Israel-Gaza war

US stocks initially slipped before changing course, as markets reopened for the first time since Hamas's surprise attack on Israel by air, land and sea on Saturday -- leading Israel to declare war on the militant group, which controls the Gaza Strip.

At least 800 people have been killed in Israel since the surprise assault, and Israel's extensive retaliatory bombing campaign on the densely-populated territory has left more than 680 people dead on the Gaza side.

Skirmishes along Israel's northern border with Iran-backed militant groups in Lebanon have also fueled concerns that the conflict could quickly spread.

All three major US stock indexes finished the trading day firmly in the green.

Benchmark oil contracts Brent and WTI jumped more than five percent earlier on Monday before easing back slightly, recovering some of the past week's dip.

Shares of key US defense manufacturers surged, with Lockheed Martin and Northrop Grumman Corp closing up 8.9 percent and 11.4 percent respectively.

"Historically, military shocks on their own have tended to be short lived," said CFRA Research chief investment strategist Sam Stovall.

"Even though oil prices spiked by 4.3 percent on the first trading day after the attack, the US dollar weakened and share prices rose, implying that traders think this military shock will also likely not trigger a new bear market," he told AFP.

- Escalating crisis -

The escalating 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 safe haven investment in times of heightened geopolitical turmoil.

"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 StoneX 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."

While equity markets in France and Germany fell, London equities were aided by gains for British-headquartered oil giants BP and Shell.

The rapidly escalating conflict between Israel and Hamas has fanned concerns about crucial oil supplies at a time when 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.

- Key figures around 2045 GMT -

New York - Dow: UP 0.6 percent at 33,604.65 points (close)

New York - S&P 500: UP 0.6 percent at 4,335.66 (close)

New York - Nasdaq: UP 0.4 percent at 13,484.24 (close)

Brent North Sea crude: UP 4.2 percent at $88.15 per barrel

West Texas Intermediate: UP 4.3 percent at $86.38 per barrel

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 4,112.57 (close)

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 $1.0569 from $1.0586 on Friday

Dollar/yen: DOWN at 148.53 yen from 149.32 yen

Pound/dollar: DOWN at $1.2235 from $1.2237

Euro/pound: DOWN at 86.35 pence from 86.50 pence

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