Global markets climbed in cautious trading as the conflict between Israel and Iran showed no sign of cooling, adding geopolitical uncertainty to the world’s economic troubles in a week packed with central bank meetings.

Wall Street futures were in positive territory amid increased focus on the upcoming Federal Reserve meeting.

TSX futures followed sentiment higher as a group of the world’s most powerful leaders gathered in Alberta for this year’s G7 summit.

As The Globe’s Mark Rendell reports, Canada and Britain yesterday agreed to resume stalled trade negotiations as both countries look to shore up their domestic industries and diversify their foreign markets in the face of U.S. protectionism.

“The situation in the Middle East is the major issue of the day,” said Ben Laidler, head of equity strategy at Bradesco BBI.

“The message from the market is that it isn’t too afraid, but it does turn what was already going to be a busy week into a frenetic one, and that has a lot of people on the sidelines.”

Overseas, the pan-European STOXX 600 was up 0.27 per cent in morning trading. Britain’s FTSE 100 rose 0.39 per cent, Germany’s DAX gained 0.28 per cent and France’s CAC 40 advanced 0.73 per cent.

In Asia, Japan’s Nikkei closed 1.26 per cent higher, while Hong Kong’s Hang Seng gained 0.7 per cent.

Oil prices edged lower after surging 7 per cent on Friday, as renewed military strikes by Israel and Iran over the weekend left oil production and export facilities unaffected.

Brent futures were down 0.8 per cent to US$73.65 a barrel, while West Texas Intermediate (WTI) futures were off 0.7 per cent to US$72.47.

“It all boils down to how the conflict escalates around energy flows,” said Harry Tchilinguirian, group head of research at Onyx Capital Group. “So far, production capacity and export capacity have been spared and there hasn’t been any effort on the part of Iran to impair flows through the Strait of Hormuz. But no one can predict which way the conflict is going to go.”

In other commodities, spot gold was down 0.5 per cent at US$3,414.36 an ounce after hitting its highest level since April 22 earlier in the session. U.S. gold futures eased 0.5 per cent to US$3,434.50.

The Canadian dollar strengthened against its U.S. counterpart.

The day range on the loonie was 73.48 US cents to 73.70 US cents in early trading. The Canadian dollar was up about 2.8 per cent against the greenback over the past month. 

The U.S. dollar index, which weighs the greenback against a group of currencies, slid 0.2 per cent to 97.99. 

The euro rose 0.28 per cent to US$1.1584. The British pound advanced 0.07 per cent to US$1.3582.

In bonds, the yield on the U.S. 10-year note was last up at 4.437 per cent.

(8:15 a.m. ET) Canadian housing starts for May.

(9 a.m. ET) Canadian existing home sales for May.

(9 a.m. ET) Canada’s MLS Home Price Index for May.

Also: G7 Summit in Kananaskis, Alta., continues through Tuesday.

With Reuters and The Canadian Press