Oil prices fell sharply and government bond yields rose yesterday on the view that the weekend’s US-led missile strikes on Syria were unlikely to mark the start of a broader conflict.

Saturday’s strikes marked the biggest intervention by Western countries against Syrian President Bashar al-Assad and his ally Russia, which is facing further economic sanctions over its role in the conflict.

European shares eased, however, adding to a mixed picture from Asian stock markets and suggesting that a degree of caution prevails.

While last week’s bid for investment safety in top-rated government bonds unwound, other traditional safe-haven bets held firmer. Gold prices were little changed, while Japan’s yen and the Swiss franc were higher than levels seen late on Friday.

European and US government bond yields, which move inversely to prices, rose across the board. That was partly as attention turned to what is expected to be a robust first-quarter US corporate earnings season, which begins in earnest this week.

The yield on both German and United States 10-year government bonds, seen as among the most liquid and safe assets in the world, were at their highest levels for three weeks.

Oil prices, meanwhile, dropped sharply. Brent crude fell more than one per cent to $71.78 a barrel, with a rise in US drilling for new production also dragging on prices.

MSCI’s world equity index, which tracks shares in 47 countries, was flat on the day and a benchmark pan-European stock index was marginally lower.

US stock futures were pointing to a higher opening on Wall Street, with Dow and S&P Futures up 0.6 per cent each and Nasdaq futures up 0.7 per cent.

Yesterday, the dollar failed to hold its early gains on the yen and eased to 107.27, though that was still up on last week’s low around 106.62.