A look at the day ahead in European and global markets from Wayne Cole.

While Israel and Iran continue to exchange missiles, markets have been resilient so far on Monday with most Asian indexes in the black. Chinese retail sales topped forecasts, but to no discernible reaction.

Oil jumped 4% at the open, but soon calmed down and is now up around 1%. Given the region's history, war in the Middle East is not surprising and, so far, this one does not look like spreading wider.

Crucially, investors seem to be assuming Iran will not threaten to close the Strait of Hormuz since that would risk dragging the United States into the conflict. There's also plenty of scope for Saudi Arabia and the rest of OPEC to expand supply if needed to keep prices restrained.

The escalation is certainly an unwanted headache for the G7 meeting in Canada, which faces more than enough confrontation ahead over President Trump's tariffs on allies.

There has been little sign of concrete progress on any trade deals, and even last week's U.S.-China tariff truce might not have fixed the restrictions on minerals most closely tied to national security.

The spike in oil will be an added complication for the Federal Reserve meeting this week, but it would have to be a sustained rise in prices to be a true inflationary threat.

A steady outcome on rates is considered a done deal with the real focus on whether the Fed's dot plots keep two cuts for this year, or scale back to just one as some suspect.

It's a busy week for central banks in general, with the Bank of Japan expected to stand pat on Tuesday but maybe signal a slowdown in its bond tapering for next year.

The Bank of England and Norges Bank are also seen holding steady, while the Riksbank is likely to cut. Markets are fully priced for a quarter point easing to zero from the Swiss National Bank, with a good chance of going negative given the strength of the franc.

Key developments that could influence markets on Monday:

- Appearances by ECB members Joachim Nagel and Piero Cipollone