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Investing.com - European stocks were marginally higher in early trading on Monday, as investors shrugged off some concerns over the implications of a weekend U.S. air strike on Iranian nuclear facilities.
The pan-European Stoxx 600 had edged up by 0.04% to 536.74 by 04:06 ET (08:06 GMT), while France’s CAC 40 and the FTSE 100 in the U.K. hovered around the flatine. The DAX index in Germany added 0.1%.
President Donald Trump ordered the bombing of three nuclear sites in Iran on Saturday, bringing the U.S. into an ongoing conflict between Tehran and Israel.
Iran has yet to give any clear indication of how it plans to respond to the U.S. attack, saying that it reserved all options to defend itself.
The Islamic republic has also warned of "everlasting consequences" and stepped up its aerial bombardments of Israel, which kicked off the violence 11 days ago with its own surprise strikes on Iranian nuclear infrastructure.
Iran has called Trump a "gambler" and seemed to hint that the weekend strikes expanding the range of legitimate targets for its military. Trump, meanwhile, raised the question of regime change in Iran in a social media post on Sunday.
Media reports in Iran have suggested that the country is mulling blocking the Strait of Hormuz, a key artery for global oil and gas supplies being sent around the world from Middle East. Other reports have said that Iran may target one of several U.S. military bases located throughout the region.
Some analysts have argued that although tensions in the Middle East have now intensified, the strikes have removed at least one shroud of uncertainty around whether Trump would move to strike Iran. Hopes also remained that the U.S. attacks will remain relatively a contained, one-off event.
Oil pares back earlier gains
Markets are now keen to see how the sudden strike, which came after Trump previously suggested that he would take as long as two weeks to deliberate on a possible attack on Iran, could impact sentiment, inflation and interest rates.
Much of the worry over price growth stems from oil, with traders warning in recent days that an escalation in the Israel-Iran fighting could lead to a disruption of key crude supplies, particularly along the Strait of Hormuz along Iran’s southern coast.
Some analysts have flagged worries that these supply constraints could cause a spike in oil prices, refuel inflation, and potentially persuade the Federal Reserve to further delay interest rate cuts.
Brent crude futures for August jumped by 0.8% to $76.11 per barrel by 03:38 ET on Monday and West Texas Intermediate crude future rose by 0.9% to $74.48 a barrel. Both of the contracts have pared back some earlier gains.