(Alliance News) - Stocks in London are set to open lower on Monday, in a risk-off start to the week following an escalation in the conflict in the Middle East.

IG says futures indicate the FTSE 100 to open 30.3 points lower, 0.4%, at 7,965.28 on Monday. The index of London large-caps ended up 71.78 points, 0.9%, at 7,995.58 on Friday.

In Tokyo, the Nikkei 225 was down 0.9% in late trade, while the S&P/ASX 200 in Sydney was 0.5% lower. The Shanghai Composite traded 1.3% higher, though the Hang Seng in Hong Kong lost 0.6%.

Iran on Saturday launched a wave of missiles and attack drones at Israel. The latter said the vast majority were repelled by air defences.

Israel and Iran accused one another Sunday at the United Nations of being the main threat to peace in the Middle East, each calling on the Security Council to impose sanctions on their sworn enemy.

"The market's reaction to the drone attack hinges on the prevailing narrative investors adopt. Should they view it through the lens of a single, isolated event, or do they perceive it as a precursor to a more significant conflict? The answer to this question will shape market sentiment and asset prices in the coming days," SPI Asset Management analyst Stephen Innes commented.

Brent oil was quoted at USD90.07 a barrel early Monday in London, down from USD91.05 a barrel late Friday. Gold traded at USD2,356.44 an ounce, falling from USD2,396.43.

The pound rose to USD1.2464 early Monday in London, from USD1.2451 at the time of the London equities close on Friday. The euro stood at USD1.0654, rising from USD1.0643. Against the yen, the dollar was trading at JPY153.83, up from JPY153.09.

This week's economic calendar has a UK inflation reading on Wednesday, after an unemployment report on Tuesday. Tuesday's also a Chinese gross domestic product reading.

Monday's economic calendar has a eurozone industrial production reading at 1000 BST, before US retail sales data at 1330 BST.

The US data comes in the wake of a loftier than expected US consumer price index reading, which hit market sentiment.

Last week Wednesday, the Bureau of Labor Statistics reported that the year-on-year rate of consumer price inflation picked up to 3.5% last month, from 3.2% in February, taking it further above the Fed's 2% inflation target.

Analysts at Barclays commented: "Last week's elevated US CPI release was a watershed moment for markets, which are now priced for less than two rate cuts by the Fed by year-end 2024 (from over six cuts as recently as January) and just over four cuts by year-end 2025."

In New York on Friday, the Dow Jones Industrial Average fell 1.2%, the S&P 500 lost 1.5% and the Nasdaq Composite added 1.6%.

The UK corporate calendar on Monday has a trading statement from emerging markets-focused investment manager Ashmore Group.

By Eric Cunha, Alliance News news editor

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