GLOBAL MARKETS-Gold surges as investors assess Mideast risk; stocks fall

(Adds U.S. market open, byline, changes dateline; previous
LONDON)
* Gold hits almost 7-year high on safe-haven demand
* Dollar eases against Swiss franc, Japanese yen
* Global stock indexes fall, but Nasdaq turns positive
* Oil hits highest since September

By Herbert Lash
NEW YORK, Jan 6 (Reuters) - Gold prices shot to almost
seven-year highs on Monday while yields on U.S. Treasury and
euro zone government debt fell as escalating U.S.-Iranian
tensions spurred demand for safe-haven assets.
A gauge of global equity markets fell.
Oil rose and the dollar weakened after the U.S. killing last
week of General Qassem Soleimani, the architect of Iran's drive
to extend its influence across the Middle East, raised concerns
around the globe that a broader regional conflict could erupt.
Iran's supreme leader wept in grief with thousands of
mourners thronging Tehran's streets for Soleimani's funeral, and
the slain military commander's successor vowed to expel U.S.
forces from the region in revenge.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.31%, while European shares extended losses. The pan-European
STOXX 600 index .STOXX lost 0.45%.
On Wall Street, the Nasdaq turned positive, a sign investors
were taking a cautious approach.
Investors have withstood the recovery from the 9/11 attacks
in 2001 and the financial crisis a decade ago, making it easier
to take in stride lesser events, said David Kelly, chief global
strategist at JPMorgan Asset Management.
"This is a case that the market is probably under-reacting
to a threat because we don't know what the Iranians may do to
retaliate and we don't know how the U.S. administration may
respond," he said.
However, it is important not to get lulled into complacency
because there is some additional risk in the equity market after
Soleimani's death and rather high stock valuations, Kelly noted.
"In the past if you have a big increase in uncertainty, the
market sells off first and asks questions later. We're in a
different situation now," he said.
Dow Jones Industrial Average .DJI fell 57.09 points, or
0.2%, to 28,577.79. The S&P 500 .SPX lost 1.18 points, or
0.04%, to 3,233.67 and the Nasdaq Composite .IXIC added 14.77
points, or 0.16%, to 9,035.54.
Emerging market stocks lost 0.99%, while earlier in Asia,
China's blue-chip CSI300 index .CSI300 ended 0.4% lower and
Tokyo's Nikkei average .N225 fell 1.91% to a one-month low.
Adding to tensions, Iran also said it was taking another
step back from its commitments under a 2015 nuclear deal with
six powers that Washington withdrew from in 2018.
Spot gold XAU= rose 2% to $1,582.59 an ounce as of 13:20
GMT, putting it on course for its biggest one-day jump in more
than four months.
The Swiss franc rose against the dollar on worries about a
broader escalation of Mideast conflict and the safe-haven
Japanese yen surged to a three-month high before weakening
against the greenback.
Edward Moya, senior market analyst at OANDA in New York,
said the market is still digesting the implications.
"We're having a little softness in the dollar against
safe-haven currencies, but I think risk appetite will return. If
Iran does retaliate, they know they're toast," Moya said.
The dollar index .DXY fell 0.15%, with the euro EUR= up
0.25% to $1.1186.
The yen JPM= weakened 0.30% versus the greenback at 108.41
per dollar, while the dollar fell 0.28% to 0.9701 franc CHF= .
The Treasury yield curve was flatter as the heightened
U.S.-Iranian tensions boosted demand for safe-haven assets.
The yield on the benchmark 10-year U.S. Treasury note has
fallen about 5.36% since the close on Jan. 2, just before an
overnight U.S. air strike in Baghdad killed Soleimani.
The 10-year U.S. Treasury note US10YT=RR fell 5/32 in
price to yield 1.8055%.
The yield on Germany's 10-year bond dropped to its lowest in
over three weeks. The bond, a safe haven that usually gains
during global uncertainty or risk, briefly fell to -0.31%
DE10YT=RR .
Yields later pulled back to -0.292%, flat on the day.
Oil prices jumped by about 1% on Monday, pushing Brent above
$70 a barrel, as rhetoric from the United States, Iran and Iraq
fanned tensions in the Middle East.
Brent crude futures LCOc1 soared to a high of $70.74 a
barrel and later were at $69.91, up 31 cents from Friday's
settlement.
U.S. West Texas Intermediate CLc1 crude was up 1 cent at
$63.06 a barrel.