A gauge of Asian shares was toppled from an 18-month top on Monday as heightened Middle East tensions sent investors scurrying for the safety of gold, which hit a near seven-year high while oil jumped to four-month peaks.

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The United States detected a heightened state of alert by Iran's missile forces, as President Donald Trump warned the U.S. would strike back, "perhaps in a disproportionate manner," if Iran attacked any American person or target.

Iraq's parliament on Sunday recommended all foreign troops be ordered out of the country after the U.S. killing of a top Iranian military commander and an Iraqi militia leader.

Spot gold surged 1.5 percent to $1,579.55 per ounce in jittery trade and reached its highest since April 2013.

Oil prices added to their gains on fears any conflict in the region could disrupt global supplies.

Brent crude futures rose $1.46 to $70.06 a barrel, while U.S. crude climbed $1.17 to $64.22.

"The risk of further escalation has clearly gone up - given the direct attack on Iran, Iran's threat of retaliation and Trump's desire to look tough - posing the threat of higher oil prices," said Shane Oliver, chief economist at AMP Capital.

"Historically though oil prices need to double to pose a severe threat to global growth and we are long way from that."

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.7 percent.

Japan's Nikkei slid almost 2 percent in a sour return from holiday, while E-Mini futures for the S&P 500 fell 0.5 percent in very choppy trade.

Chinese shares opened in the red too, with the blue-chip CSI300 index off a shade while Australian shares were off 0.4 percent.

"Geopolitical tensions look like remaining elevated in the coming days, so lending support to oil prices and keeping risk asset markets on the defensive," said Ray Attrill, head of FX strategy at National Australia Bank.

Sovereign bonds benefited from the safety bid with yields on 10-year Treasuries down at 1.769 percent having fallen 10 basis points on Friday. Treasury futures gained 5-1/2 ticks.

In currency markets, the Japanese yen remained the favoured safe harbour courtesy of Japan's massive holdings of foreign assets. Investors assume Japanese funds would repatriate their money during a true global crisis, pushing the yen higher.

On Monday, the dollar was last at 107.98 yen, after falling to a three-month trough of 107.78 earlier in the session. The euro likewise eased to 120.55 yen having hit a three-week low.

The dollar was steadier against the other majors, with the euro little changed at $1.1161. Against a basket of currencies, the dollar was holding at 96.86.

The risk-sensitive currencies of Australia and New Zealand were on track for their fourth straight session of losses.

First Published:Jan 6, 2020 8:01 AM IST