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Stocks rise on hope Middle East tensions can be contained

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Goldman Sachs' profits boosted by recovery in dealmaking

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Oil dips after 10% rally over last month

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Gold ticks higher, but safe-havens not generally in demand

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Graphic: World FX rates http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, April 15 (Reuters) - Wall Street was set to

start the week modestly higher while oil, the dollar and bond

prices all dipped on Monday as investors kept Middle East

concerns in check after Iran's weekend attacks on Israel.

Tehran's offensive involved more than 300 missiles and

drones but having sold off sharply on Friday and with world

powers urging restraint, market moves showed an element of

relief.

Oil prices, which have risen 10% as conflict has spread

over the past month, dropped 1%, Israel's shekel rose

1.3% and U.S. futures and the pan-European STOXX 600

both climbed almost half a percent, albeit led by

defence stocks.

Gold, which has been hitting record highs for weeks, rose

0.3% but the dollar and the ultra-safe government

bonds that money managers often turn to when

geopolitical tensions mount, were all lower.

Close Brothers Asset Management's Chief Investment Officer

Robert Alster said the hope was that U.S. and Gulf diplomatic

efforts would now prevent further escalation of the troubles.

"There is a general belief (among investors) that it

isn't going to escalate," Alster said, highlighting that oil

prices had not breached their September highs of $96 a barrel.

"There has been a tit-for-tat and hopefully now we move on."

There is also another busy week of economic data and company

earnings in store and the International Monetary Fund's spring

meetings, which can steer the global narrative, get underway

too.

One of those data points is U.S. retail sales later. The

dollar index, which measures the currency against a

basket of six others, was steady at 105.92, just below Friday's

5-1/2 month high of 106.11.

It did though scale a 34-year high against the Japanese yen

on growing expectations that sticky inflation will

keep U.S. interest rates higher for longer and that Tokyo has

not rushed to intervene in FX markets yet.

WAIT AND SEE

Higher Wall Street futures were a relief after a heavy

selloff on Friday that as well as the Middle East concerns had

also been fuelled by dwindling Fed rate cut hopes and a round of

disappointing bank earnings.

Goldman Sachs was looking to turn the tide though with its

shares up 3% in pre-opening bell trading as a recovery in M&A

deals and debt underwriting helped boost its profits nearly 30%.

Friday's falls had consigned MSCI's main world share index

to its worst day in six months though and MSCI's broadest index

of Asia-Pacific shares had fallen back overnight

though as the sense of nervousness swept over bourses there.

Japan's Nikkei and Hong Kong's Hang Seng

both slid as much as 1%, while Australian stocks lost

nearly 0.5%.

The threat of open warfare erupting between Middle East foes

Iran and Israel and dragging in the United States has left the

region on tenterhooks. U.S. President Joe Biden warned Israeli

Prime Minister Benjamin Netanyahu the U.S. will not take part in

a counter-offensive against Iran.

Israel said "the campaign is not over yet".

Oil prices showed traders had largely priced in a

retaliatory attack from Iran, which could lead to more strictly

enforced sanctions on Iranian oil. That saw Brent crude futures

peaking at $92.18 a barrel last week, the highest level

since October.

Monday's 1% drop left Brent back below $90 per barrel, U.S.

West Texas Intermediate crude futures at just under $85 a

barrel while gold was a touch higher at $2,351 an ounce.

"It is something of a wait and see now for markets as we

wait to see how Israel reacts and how Iran's proxies respond,"

said UBS Global Wealth Management multi-asset strategist Kiran

Ganesh said.