LONDON: World stock markets fell on Friday, and oil prices surged, as Israel launched military strikes on Iran, sparking inflows into safe havens such as gold and the dollar.

An escalation in the Middle East a major oil-producing region adds uncertainty to financial markets at a time of heightened pressure on the global economy from US President Donald Trump`s unpredictable trade policies.

Brent crude oil prices were last up 5.5pc at $73.22perbarrel,having jumped as much as 14pc during Asian trading hours. They were set for their biggest one-day jump since 2022, when energy costs spiked after Russia`s invasion of Ukraine. US oil futures rose7.3petoaround$73.

Gold, a safe haven in times of global uncertainty, rose 1.1pc to $3,422 per ounce, bringing it close to the record high of $3,500.05 from April.

The rush to safety was matched by a dash out of risk assets. The Dow Jones Industrial Average fell 0.9pc, the S&P 500dropped 0.34pc, and the Nasdaq Composite lost 0.4pc. European shares dropped almost 1pe, and in Asia, major bourses in Japan, S. Korea and Hong Kong fell over 1pc each.

`The re-emergence of major conflict in the Middle East should raise geopolitical stress, including sharply higher oil prices, Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, said in an email. Samana added, though, that the conflict should represent a buying opportunity for longterm investors, including in US large-cap stocks and commodities.

Treasuries initially benefited from the rush for safer assets, but as the day wore on, investors` focus turned totheinnationary impact of higher oil prices. US 10-year Treasury yields were last up 6.7 basis points at 4.42pc, having touched a one-month low of 4.31pc.

Bond yields move inversely to prices.

The euro was down 0.2pc at $1.15, after rising on Thursday to the highest since October 2021.

-Reuters