SINGAPORE (Reuters) - The yen hit a three-month low on Monday as Japan's ruling party lost its parliamentary majority, while oil tumbled after Israel's weekend strike on Iran bypassed oil or nuclear targets.

Japan's Nikkei, after initially falling, rose 1.6% and the yen slipped as far as 0.5% to 153.3 per dollar following the ruling Liberal Democratic Party's (LDP) weakest result since 2009 in Japan's weekend election.

Brent crude futures were 4.2% lower and traded as cheaply as $67.80 a barrel after Israel's response to an Iranian missile attack focused, so far, on missile factories and other sites near Tehran and not on disrupting energy supplies. [O/R]

In Japan, the LDP which has ruled for most of the post-war years and junior coalition partner Komeito won 215 lower-house seats at Sunday's election, public broadcaster NHK reported.

This falls well short of the 233 needed for a majority and the yen was squeezed since investors figured any government that emerges is likely to make a dovish shift in economic policies. [.T][FRX/]

"The markets are likely to think this means more trouble for the yen with 155 the first target and (the finance ministry's) line in the sand at 160," said Bob Savage, head of markets strategy and insights at BNY in a note.

Gains in the stock market, which often moves in the opposite direction to the yen as a weaker currency can help exporters, were led by technology companies.

RISING DOLLAR

Broader currency markets were steady, leaving the dollar on course for its largest monthly rise in 2-1/2 years as signs of strength in the U.S. economy and the prospect of a Donald Trump presidency have driven U.S. yields sharply higher.

At 4.23%, benchmark 10-year Treasury yields are up 43 basis points through October, against a rise of 16 bps for 10-year bunds and 23 bps for gilts.

Markets price almost no chance of a Federal Reserve rate cut at its November meeting, down from a 50% chance of a 25 bp cut a month ago, according to CME's FedWatch tool.

The euro was steady on Monday at $1.0796 and down 3% through October. The New Zealand dollar has lost nearly 6% through the month, additionally weighed by a dovish central bank and disappointing stimulus plans from China.

Elsewhere U.S. stock futures rose 0.5% in early trade ahead of a big week of earnings and data.

Five of the "Magnificent Seven" group of megacap companies are set to report: Google parent Alphabet, Microsoft, Facebook owner Meta, Apple and Amazon.

The U.S. jobs report on Nov. 1 comes as investors are weighing whether a stronger-than-expected economy could lead to fewer interest rate cuts, while inflation readings are due in Europe and Australia.

Weekend data showed China's industrial profit dived 27.1% in September versus a year earlier.

Gold, which hit record highs last week, hovered just shy of those levels at $2,736 an ounce.

(This story has been refiled to fix a typo in paragraph 3)