Frankfurt (Reuters) - Despite the Iranian attack on Israel, investors on the European stock markets are calm.

The Dax and the EuroStoxx50 were both up just under one percent at 18,071 and 4998 points respectively at midday on Monday. According to analysts, the risk of Iranian retaliation following the attack on the Iranian embassy in Syria, which was attributed to Israel, has already been largely priced into share prices for some time. Investors are also betting that the attack will remain a one-off thanks to diplomatic efforts, said Jochen Stanzl, chief analyst at broker CMC Markets.

However, he urged caution: "The fact that the DAX opened higher should not obscure the fact that nervousness on the trading floor has increased noticeably following Iran's unprecedented attacks on Israel. The key now is how Israel will react."

OIL PRICE FALLS - HOPES FOR A "MODERATE" REACTION FROM ISRAEL

Hopes for a restrained reaction from Israel to the Iranian drone and missile attack at the weekend and the avoidance of a further escalation in the conflict caused oil prices to fall. North Sea Brent crude and US WTI crude fell by just under one percent each to 89.73 and 84.89 dollars per barrel (159 liters). "The limited damage and the fact that there were no casualties means that Israel's response may be more measured," said ING commodities expert Warren Patterson. "But of course there is still a lot of uncertainty."

The uncertainty as to whether the war in the Gaza Strip will now spread to the entire region boosted shares in defense companies. In Germany, Rheinmetall and Hensoldt each rose by around one and a half percent. Their rivals SAAB from Sweden, Leonardo from Italy, Thales from France and BAE Systems from the UK gained between just under two and just under three percent.

Investors also stocked up on Adidas. Shares in the sporting goods manufacturer jumped 3.4 percent to 203.10 euros following an upgrade. The experts at major US bank Morgan Stanley upgraded them to "overweight" from "underweight". The target price was also raised from 175 euros to 235 euros. The Franconian company's new products have been well received by customers and therefore provide a positive outlook for Adidas sales, they said.

Shares in Ageas took center stage on the Brussels stock exchange. The major French bank BNP Paribas wants to acquire a stake in the Belgian insurer. Ageas shares climbed by a good three percent. BNP Paribas shares advanced by just under one percent. The Paris-based bank wants to buy a nine percent stake in Ageas from the Chinese conglomerate Fosun for around 730 million euros. The deal ends months of speculation about the future of Fosun's stake in Ageas. The largest Chinese private company had recently sold several assets in order to reduce its debt.

In Zurich, a downgrade put pressure on the shares of Swiss PC equipment manufacturer Logitech. The shares lost almost three percent. The experts at the major US bank Morgan Stanley had downgraded them to "Underweight" after previously rating them "Equal-Weight". Following the surge in sales growth during the coronavirus pandemic, the company is entering a "new world with slower underlying growth", the statement said. The background to this is not only the growing tendency of companies to save on IT equipment, but also the ever-increasing competition.

(Report by Zuzanna Szymanska, edited by Christian Götz. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)