Wall Street is expected to open lower on Friday, while European markets are also retreating at midday, after overnight Israeli strikes on Iranian nuclear facilities sent oil prices surging and triggered a flight to safe-haven assets.

Futures on New York indexes indicate Wall Street will open down by 1.16% for the Dow Jones, 1.14% for the Standard & Poor's 500, and 1.44% for the Nasdaq.

In Paris, the CAC 40 is down 1.18% at 7,673.39 points as of 10:27 GMT. In Frankfurt, the Dax is off 1.51%, and in London, the FTSE 100 is down 0.46%.

The EuroStoxx 50 index is down 1.52%, the FTSEurofirst 300 loses 0.93%, and the Stoxx 600 drops 0.95%.

The escalation in the Middle East, a key region for oil production, is adding to the uncertainty already weighing on markets as the global economy faces mounting pressure from the aggressive and unpredictable trade policies of U.S. President Donald Trump.

The Israeli military bombed dozens of targets in Iran overnight from Thursday to Friday, including nuclear sites and ballistic missile factories, killing military commanders and scientists.

"The geopolitical escalation adds another layer of uncertainty to an already fragile environment," said Charu Chanana, Chief Investment Strategist at Saxo, adding that crude oil and safe-haven assets will likely remain on an upward trajectory if tensions continue to intensify.

Iran, which has vowed to retaliate, launched drones toward Israeli territory, which Israel is attempting to intercept, according to Israeli military spokesperson Brigadier General Effie Defrin.

Oil prices soared on Friday, reaching their highest levels in several months as Middle East tensions stoke supply disruption fears. Brent crude is up 8.82% at $75.48 a barrel, while U.S. light crude (West Texas Intermediate, WTI) rises 9.16% to $74.27 a barrel.

"Iran has declared an emergency and is preparing to retaliate, which increases the risk not only of disruptions but also of contagion to other neighboring oil-producing countries," noted Priyanka Sachdeva, analyst at Phillip Nova.

Meanwhile, investors are also focused on next week's U.S. Federal Reserve (Fed) meeting, where policymakers are expected to keep interest rates unchanged.

STOCKS TO WATCH ON WALL STREET [L8N3SG0VB]

EUROPEAN STOCKS

TotalEnergies is up 1.39%, buoyed, like the rest of the oil sector, by rising crude prices. In London, Shell gains 1.57%.

Major European defense companies, such as Britain's BAE Systems and Sweden's Saab AB, are up 2.87% and 2.16% respectively, supported by the escalating Middle East tensions.

The airline sector, however, is suffering as many carriers have ceased flying over Israeli, Iranian, Iraqi, and Jordanian airspace on Friday. Air France-KLM is down 4.49%, and Lufthansa drops 3.33%.

BONDS

U.S. Treasury yields are slightly higher after falling earlier in the day.

The yield on 10-year Treasuries is up 1.4 basis points at 4.3710%. The two-year yield rises 1.6 basis points to 3.9223%.

The yield on the German 10-year Bund is up 1.9 basis points at 2.4980%, while the two-year Bund yield rises 2.1 basis points to 1.8340%.

CURRENCIES

On the currency market, the Swiss franc and the yen are appreciating, benefiting from their safe-haven status--a move that also affects the U.S. dollar, which is up 0.45% against a basket of major currencies.

The euro is down 0.57% at $1.1517.

METALS

Gold prices are rising as investors flock to safe-haven assets following the Israeli strike on Iran.

Spot gold is up 1.09% at $3,421.12 an ounce.

NO FURTHER ECONOMIC INDICATORS ON THE JUNE 13 AGENDA

(Some data may be subject to slight delays)

(Written by Mara Vîlcu)

by Mara Vîlcu