World markets slide on alarm over rising Mideast tensions

World shares fell Monday as financial markets were rattled by escalating tensions in the Middle East following the killing by a U.S. air strike of an Iranian general.

Germany’s DAX dropped 1.9% to 12,968.93 and the CAC 40 in Paris gave up 1.3% to 5,967.66. In London, the FTSE 100 lost 1.1% to 7,540.92. The future contract for the S&P 500 declined 0.7%, while that for the Dow Jones Industrial Average lost 0.8%.

After a brief respite thanks to a preliminary agreement between Washington and Beijing that staved off a further escalation of trade tensions, world markets have been hit by a fresh onslaught of worries.

An Iranian general who replaced the leader killed by the U.S. airstrike in Baghdad vowed Sunday to take revenge as Tehran abandoned the remaining limits of its 2015 nuclear deal with world powers in response to the slaying.

Esmail Ghaani’s threat came as the backlash over the U.S. killing of top Iranian general Qassem Soleimani mounted, with Iraq’s parliament calling for the expulsion of all American troops from Iraqi soil.

President Donald Trump said the attack was ordered because Soleimani was plotting to kill many Americans. The Pentagon took steps to reinforce the American military presence in the Middle East in preparation for reprisals from Iran.

The air strike marks a major escalation in the conflict between Washington and Tehran, and investors sought safety in U.S. government bonds, sending their yields lower. The price of gold rose.

Asian economies depend heavily on oil from the Middle East, and oil prices surged, with benchmark U.S. crude oil up 85 cents, or 1.3%, to $63.89 per barrel. It jumped 3.1% to $63.05 per barrel on Friday. Brent crude, used to price international oils, rose $1.11 or 1.6% to $69.71 per barrel. It rose $2.35, or 3.5%, to close at $68.60 per barrel on Friday.

The Nikkei 225 index in Japan slid 1.9% to 2204.86 on Monday, while Hong Kong’s Hang Seng index lost 0.8% to 28,226.19. In South Korea, the Kospi lost 1% to 2,155.07. The S&P ASX 200 was almost unchanged, at 6,735.70. The Shanghai Composite index also was flat, at 3,083.41. India’s Sensex slipped 2% to 41,652.71. Shares also fell in Taiwan and Southeast Asia.

The dollar fell to 107.97 Japanese yen from 108.09 yen on Friday. The euro rose to $1.1189 from $1.1159.

On Friday, the S&P 500 dropped 0.7% to 3,234.85, ending with a 0.2% loss for the week. The Dow Jones Industrial Average fell 0.8%, to 28,634.88. The Nasdaq lost 0.8% to 9,020.77 and the Russell 2000 index of smaller company stocks gave up 0.4% to 1,660.87.

The major stock indexes were coming off record highs after closing out 2019 earlier in the week with the best annual performance by the S&P 500 and Nasdaq since 2013.

The price of gold, which investors buy in times of uncertainty as a safe haven of value, rose $28.00, or 1.8%, to $1,580.30 per ounce.

Bond prices rose. The yield on the 10-year Treasury fell to 1.78% from 1.79% late Friday, a big move. Lower bond yields bring down the interest rates that banks charge for mortgages and other consumer loans, making them less profitable.