Oil prices rallied, safe-haven assets including government bonds and gold rose, while global stocks fell Monday after Palestinian resistance group Hamas launched a surprise attack against Israel at the weekend, sparking fresh concerns about tensions in the Middle East.

The crisis fanned concerns about supplies of crude from the region at a time when supply worries are already high owing to Saudi Arabia and Russia's output cuts.

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.

Brent crude, the pricing basis for international trading, rose by as much as $4 a barrel at one point and last traded up around $3, or 3.55%, at $87.61. Conflict in the Middle East often pushes oil prices higher given the risk of disruptions to supplies.

"Disruptions or escalations in the region can have far-reaching implications for energy markets, global supply chains, and geopolitical dynamics," Stephen Innes of SPI Asset Management said in a commentary.

The conflict has not yet had any discernible impact on oil output, but geopolitical escalations in the Middle East typically lead to a "buy-first-ask-questions-later" response, Innes said.

Oil prices had eased back from highs of the mid $90 range last month in recent days, falling sharply last week.

"Key for markets is whether the conflict remains contained or spreads to involve other regions, particularly Saudi Arabia," said ANZ Group's Brian Martin and Daniel Hynes.

"Initially at least, it seems markets will assume the situation will remain limited in scope, duration, and oil-price consequences. But higher volatility can be expected."

Meanwhile, Innes said stocks tend to eventually recover and trend higher after an initial period of volatility. Safe-haven assets like gold and Treasurys, which initially see gains during such crises, tend to fade from their initial price spikes as the situation stabilizes.

"But with Middle East analysts considering this to be a pivotal moment for Israel, the view looks incendiary in any current scenario," Innes said.

A decidedly risk-off mood also saw investors push into the safety of the dollar, which was up against the pound and euro, as well as the Australian and New Zealand dollars.

The yen, considered one of the safest currencies, strengthened against the greenback, though it still remains locked around 11-month lows.

Gold, another key haven, rose around 1% to $1,850 an ounce.

The cautious mood was a balm for sovereign bonds after recent heavy selling and 10-year U.S. Treasury futures rose a sizable 13 ticks. The cash Treasury market was closed on Monday for a U.S. holiday.

Equity markets were mixed, with Shanghai dropping on its first day back after a weeklong holiday as investors continue to fret over the stuttering Chinese economy.

Tel Aviv's main stock benchmark was down 0.4%. It closed 6.5% lower Sunday, after the attacks. Early Monday, Israel's Central Bank said it will sell up to $30 billion in foreign exchange to prop up the shekel, which fell to a near 8-year low.

It also said it will provide up to $15 billion to support market liquidity.

Israeli government bonds fell, with the 2120 "Hundred Year" bond down 5.3 cents on the dollar at a record low.

There were also losses in Mumbai, Singapore, Manila, Bangkok and Wellington, though Hong Kong rose in shortened trade, having been closed in the morning owing to a typhoon.

Sydney and Jakarta eked out gains. Tokyo was closed for a holiday.

London edged up, while Paris and Frankfurt were lower.

The tepid performance came despite a rally on Wall Street, where traders welcomed data showing a forecast-busting jump in new jobs but wage growth slowing.

The "Goldilocks" figures – neither too strong nor too weak – lifted optimism the world's top economy can avoid a recession even as the U.S. Federal Reserve (Fed) keeps rates elevated.

Still, there are worries the bank will hike one more time before the end of the year, with officials determined to bring inflation to heel and keep it at their 2% target.