Global stocks diverged and oil prices tumbled on Monday as markets were relieved that Israel's strikes on Iran had avoided the country's energy infrastructure.
Israel avoided Iran's oil and nuclear facilities in its air strikes on the country on Saturday, easing investor fears about the extent of Israel’s retaliation to Tehran's October 1 missile barrage.
Iran has downplayed the attack, saying it caused "limited damage" to a few radar systems on military sites.
"Investors breathed a sigh of relief as the attack was more restrained than expected," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Brent North Sea crude, the international benchmark oil contract, fell around six percent on Monday morning with prices hovering around $71 per barrel.
"Israel's strike, carefully avoiding energy sites, has softened fears of a full-scale conflict with Iran," said Stephen Innes, analyst at SPI Asset Management.
"Even more telling is Iran's response, downplaying the attack's impact and signaling that its warnings may have deterred any more aggressive action from Israel," he added.
Concerns have shifted back to focus on oversupply in 2025 and a slowdown in demand from China, the world's largest oil importer, according to analysts.
London's FTSE 100 retreated as crude prices affected both ends of the top-tier index.
Oil and gas giants BP and Shell were both hit by the lower crude prices, making them the biggest fallers.
Meanwhile airlines easyJet and British Airways-owner IAG led gains on the prospect of lower fuel prices.
In the eurozone, Paris advanced and Frankfurt retreated.
Dutch medical device maker Philips lowered its full year sales target Monday blaming a deterioration in demand from China, with its share price dropping more than 11 percent on the Amsterdam stock exchange's blue-chip AEX index.
Investors are preparing for a busy week ahead, including the release of key US monthly jobs figures on Friday which could provide more clues about future Federal Reserve interest rate cuts.
It's also a big week for US company earnings as five of the "Magnificent Seven" tech stocks will report third-quarter results, including Alphabet (Google), Amazon, Apple, Meta (Facebook) and Microsoft.
"The market expects the US tech giants to continue to report double digit earnings growth for the next five quarters, so there are some big expectations for these companies," said Kathleen Brooks, research director at trading group XTB.
On currency markets the yen hit a three-month low, sliding more than one percent against the dollar as Japan's ruling coalition looked set to lose its majority after Sunday's general election.
Tokyo led gains on Asian markets, closing up 1.8 percent as the yen's weakness boosted Japanese shares, with exporters benefiting from a cheaper currency.
Shanghai also rose while Hong Kong was flat.
In India, Mumbai stocks were up 1.1 percent, with shares in solar panel maker Waaree Energies soaring 75 percent on their market debut.
Key figures around 1100 GMT
Brent North Sea Crude: DOWN 5.7 percent at $71.29 per barrel
West Texas Intermediate: DOWN 6.1 percent at $67.43 per barrel
London - FTSE 100: DOWN 0.2 percent at 8,231.38
Paris - CAC 40: UP 0.2 percent at 7,509.94
Frankfurt - DAX: DOWN 0.2 at 19,425.18
Tokyo - Nikkei 225: UP 1.8 percent at 38,605.53 (close)
Hong Kong - Hang Seng Index: FLAT at 20,599.36 (close)
Shanghai - Composite: UP 0.7 percent at 3,322.20 (close)
New York - Dow: DOWN 0.6 percent at 42,114.40 (close)
Euro/dollar: UP at $1.0819 from $1.0799 on Friday
Pound/dollar: UP at $1.2984 from $1.2958
Dollar/yen: UP at 152.53 yen from 152.27 yen
Euro/pound: UP at 83.35 pence from 83.30 pence
