By Wayne Cole and Swati Pandey

SYDNEY, Jan 6 – Tensions in the Middle East after the killing of a top Iranian general by the United States pushed an index of Asian shares off an 18-month high on Monday as investors pushed safe-haven gold near a seven-year high, and oil jumped to four-month peaks.

The United States detected a heightened state of alert by Iran‘s missile forces, as President Donald Trump warned the United States would strike back, “perhaps in a disproportionate manner,” if Iran attacked any American person or target.

Iraq’s parliament on Sunday recommended all foreign troops be ordered out of the country after the U.S. killing of a top Iranian military commander and an Iraqi militia leader in a drone strike on a convoy at Baghdad airport.

Spot gold gained 1.6% to $1,579.55 per ounce in jittery trade to reach its highest since April 2013.

Oil prices extended gains on fears any Middle East conflict could disrupt global supplies.

Brent crude futures rose $1.9 to $70.50 a barrel, while U.S. crude climbed $1.5 to $64.57.

“The risk of further escalation has clearly gone up – given the direct attack on Iran, Iran‘s threat of retaliation and Trump’s desire to look tough – posing the threat of higher oil prices,” said Shane Oliver, chief economist at AMP Capital.

“Historically though oil prices need to double to pose a severe threat to global growth and we are long way from that.”

In early European trades, the pan-region Euro Stoxx 50 futures eased 0.6%, German DAX futures were down 0.75% while FTSE futures were off 0.4%.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.7%.

Japan’s Nikkei slid almost 2% in a sour return from holiday, while E-Mini futures for the S&P 500 fell 0.3% in very choppy trade.

Chinese shares, which had opened in the red, reversed their losses, as did Australian shares which ended the day flat. Hong Kong’s Hang Seng index eased 0.5%.

“Geopolitical tensions look like remaining elevated in coming days, so lending support to oil prices and keeping risk asset markets on the defensive,” said Ray Attrill, head of FX strategy at National Australia Bank.

Sovereign bonds benefited from the safety bid with yields on 10-year Treasuries down at 1.7725% having fallen 10 basis points on Friday. Treasury futures gained 4-1/2 ticks.

The yen remained the favoured safe haven among currencies thanks to Japan’s massive holdings of foreign assets. Investors assume Japanese funds would repatriate their money during a true global crisis, pushing the yen higher.

On Monday, the dollar was last at 108.05 yen, after falling to a three-month trough of 107.78 earlier in the session. The euro likewise eased to 120.64 yen having hit a three-week low.

The dollar was steadier against other majors, with the euro a tad firmer at $1.1165. Against a basket of currencies, the dollar was holding at 96.852.

The risk sensitive currencies of Australia and New Zealand were on track for their fourth straight session of losses.

(Editing by Sam Holmes & Simon Cameron-Moore)