SINGAPORE (Reuters) - The euro slid, Swiss franc rose and dollar jumped on Monday as investors sought safety after the U.S. and Israel bombed Iran, killing Supreme Leader Ayatollah Ali Khamenei and raising the risk of protracted conflict in the Middle East.
The franc climbed as much as 0.4% to 0.7661 a dollar and shot 0.6% higher to its strongest since 2015 on the euro at 0.9030 in early Asian trade, before paring gains.
"You don't know how long this is going to last, how high oil is going to go, how long the Strait of Hormuz is going to be closed," said BNZ strategist Jason Wong in Wellington. "The initial reaction is mild risk off, and you've just got to take each day as it comes."
The Israeli military said its air force killed Khamenei and his death, at 86, was confirmed by Iranian state media, setting off a high-stakes succession race.
Attacks extended into Monday after Iran hit back, with the Iranian Revolutionary Guard saying it had struck three U.S. and British oil tankers, while blasts were reported over Dubai and Doha.
Oil prices are markets' initial top focus and leapt around 9% early Monday on disruption to sea-borne trade.
After knee-jerk appreciation, the yen weakened 0.2% to 156.235 yen against the dollar as traders digested the effect of the jump in energy prices on oil imports, while assessing what the conflict could mean for interest rates.
"We had already viewed the likelihood of an interest rate hike in March or April as low, but amid rising uncertainty stemming from developments of the situation in the Middle East, the BOJ is likely to adopt a more cautious stance, further reducing the probability of a near-term rate hike," Morgan Stanley MUFG analysts wrote in a research report.
The euro fell 0.3% to $1.1784 and sterling slid 0.3% to $1.3451 on the potential for disruption to energy supply in Europe.
"The euro is in a difficult spot," Wells Fargo analysts said in a note. "Europe's natural gas storage refill season is about to begin and the EU is heading into it with record-low gas in storage, implying it will need to buy a large chunk of energy right as prices potentially shoot higher."
The risk-sensitive Australian dollar tumbled as much as 1.2% before paring declines to 0.3% and was last trading at $0.7096. The New Zealand dollar was last down 0.2% at $0.5979 after retracing an earlier decline of 0.8%.
China's yuan in offshore trade was 0.1% weaker at 6.868 yuan to the dollar, as the People's Bank of China weakened its daily fixing price for the currency onshore to stem appreciation against the greenback. China is an energy importer and the main buyer of Iranian oil.
Currencies of exporters such as Canada and Norway were steady in Asian morning trade.
Israeli military spokesperson Lieutenant Colonel Nadav Shoshani said many targets remained and that deploying ground forces was not under consideration.
U.S. President Donald Trump told the Daily Mail the military campaign could run for a month. "We figured it will be four weeks or so. It's always been about a four-week process," he said.