World oil prices sank Monday as traders bet on de-escalation in the Middle East despite a strike on Israel by key crude producer Iran.

Brent and WTI prices shed one percent before paring losses, while global stock markets diverged.

Iran unleashed more than 300 ballistic and cruise missiles and attack drones late Saturday. Israel's air defenses repelled most.

Tehran said the aerial strike was a legitimate response to a deadly attack on an Iranian embassy building in Damascus that it blames on Israel. But it also said, "the matter can be deemed concluded".

Haven investment gold dipped Monday after reaching a record peak of $2,431.52 before the weekend.

The dollar touched a fresh 34-year high against the yen at over 154 yen to the greenback.

"The market sees de-escalation as the most likely path despite the Iranian strike," noted analysts at DNB Markets.

"The attack was well announced, with Israel and its allies fully prepared, it caused minor damage and no casualties, and with Iran quickly out saying that 'the matter can be deemed concluded'. A clear invitation to de-escalate."

Experts said the limited scope of the attack showed Iran was seeking to make a show of strength, but without sparking a conflict.

US President Joe Biden was reported to have cautioned Israeli Prime Minister Benjamin Netanyahu to "take the win" and forego a counterattack.

Nevertheless, Asian equities mostly fell on fears of a broader conflict in the volatile Middle East, although Shanghai stocks jumped higher on news of fresh regulatory measures that could help its long-term performance.

"All eyes remain on whether there will be any response from Israel and markets will likely be volatile in the day ahead to any geopolitical headlines," said Saxo analyst Redmond Wong.

In Europe, London equities were essentially flat as energy stocks were hit by the weak oil price, but Frankfurt and Paris rallied as data showed a strong turnaround in eurozone industrial production for February.

Wall Street's three main indices opened higher after strong data and positive corporate earnings news.

March retail sales beat expectations with 0.7 month-on-month growth in yet another indication that the US economy remains strong despite the Fed's high-interest rates meant to squash inflation.

US equity markets have largely taken in their stride the receding prospects of cuts in US interest rates as strong economic growth means better prospects for corporate earnings.

"It’s better to have solid economic growth amid moderate inflation and elevated rates, than to have an economy in free-fall alongside lower rates and falling inflation," said investment analyst Bret Kenwell at eToro brokerage.

On the corporate earnings front, Goldman Sachs beat expectations with a 27 percent increase in first quarter profits to $3.9 billion.

Its shares rose five percent as trading got underway.

Shares in Tesla fell two percent  following reports that the electric car manufacturer plans to slash its global workforce by more than 10 percent amid dropping sales and price cuts.

- Key figures around 1330 GMT -

Brent North Sea Crude: DOWN 0.8 percent at $89.70 per barrel

West Texas Intermediate: DOWN 0.8 percent at $84.98 per barrel

New York - Dow: UP 1.0 percent at 38,357.16 points

New York - S&P 500: UP 0.7 percent at 5,161.51

New York - Nasdaq Composite: UP 0.6 percent at 16,272.22

London - FTSE 100: UP less than 0.1 percent at 7,999.51

Paris - CAC 40: UP 1.2 percent at 8,107.97

Frankfurt - DAX: UP 1.3 percent at 18,158.40

EURO STOXX 50: UP 1.3 percent at 5,021.60

Tokyo - Nikkei 225: DOWN 0.7 percent at 39,232.80 (close)

Hong Kong - Hang Seng Index: DOWN 0.7 percent at 16,600.46 (close)

Shanghai - Composite: UP 1.3 percent at 3,057.38 (close)

Dollar/yen: UP at 154.35 yen from 153.24 yen on Friday

Euro/dollar: UP at $1.06 from $1.0645

Pound/dollar: UP at $1.24 from $1.2449

Euro/pound: DOWN at 85. pence from 85.48 pence