London: Oil rose 1% before paring gains on Monday after a diplomatic rift involving some of the Arab world’s major energy producers, while sterling weakened only marginally following a deadly attack in London days before a parliamentary election.

The dollar lifted off seven-month lows hit on Friday in reaction to a weaker-than-forecast US jobs report as US treasury yields rose and markets signalled they expected the US Federal Reserve to raise interest rates next week.

European shares were marginally lower, failing to build on momentum from Asia, with some markets closed for a holiday.

In the Middle East, Qatar’s main stock index fell more than 7% after Saudi Arabia—the world’s biggest crude oil exporter—the United Arab Emirates, Egypt and Bahrain cut ties with Qatar, accusing the Gulf Arab state of supporting terrorism.

The move escalated a dispute over Qatar’s support for the Muslim Brotherhood, the world’s oldest Islamist movement. Dubai stocks fell 1.7% and the main Saudi index dropped 0.8%.

Qatar is the world’s biggest supplier of liquefied natural gas (LNG) and a major supplier of condensate.

Brent crude oil, the international benchmark, rose more than 1% at one point, recouping some of last week’s 4% loses, before paring gains. It stood at $50.29 a barrel, up 0.7% on the day.

“There is not much geopolitical risk premium priced into oil right now, (but) if tensions do ratchet higher between the key members of the Organization of the Petroleum Exporting Countries (Opec), like Saudi Arabia, Iran and Iraq, then the market will start paying attention to this," said Virendra Chauhan, an oil analyst at consultants Energy Aspects.

Britain’s pound fell half a cent against the dollar after the third militant attack in Britain in less than three months but recovered to trade down just 0.1% at $1.2875.

The modest reaction—the FTSE 100 stock index was down 0.2%, in line with the pan-European STOXX 600 index—follows the pattern after attacks in other European cities in recent months.

Prime Minister Theresa May said Thursday’s election would go ahead. Opinion polls in the past week have put her Conservatives ahead, though with a narrowing lead over the Labour opposition.

“Regardless of this week’s outcome of UK elections, we believe the pound should prove a sell on rallies. This is especially true as investors’ focus will swiftly shift to actual Brexit negotiations later this month," Credit Agricole strategists wrote in a note to clients.

The dollar index, which measures the greenback against a currency basket, rose 0.1%, having hit its lowest since 9 November after Friday’s report showing the US economy added fewer jobs than expected last month. Unemployment, however, fell to a 16-year low of 4.3%.

US 10-year treasury yields, which fell on Friday, were up 1.4 basis points at 2.173%.

Markets see a 94.7% chance of the Federal Reserve raising interest rates at its 13-14 June meeting, though a Reuters poll on Friday showed top US banks split about when the central bank hikes rates after that.

The euro dipped 0.1% to $1.1267 and the yen was down a similar amount at 110.52.

European Central Bank (ECB) policymakers meet this week. They are expected to take a more benign view of the euro zone economy and discuss dropping pledges to ramp up economic stimulus if needed, sources with direct knowledge of the discussions told Reuters last week.

Germany’s benchmark 10-year bond or yield traded 1.6 basis points higher on Monday at 0.29%, close to one-month lows hit last week.

“The data, especially the inflation numbers, have not been strong enough to suggest a hawkish tone from the ECB this week," said Credit Agricole European fixed income strategist Orlando Green. “They are likely to leave things as balanced as possible."

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.1%. Japan’s Nikkei closed down less than 0.1%.

Gold hit a six-week high of $1,282 an ounce, with traders citing the US jobs report and reduced prospects of aggressive Fed rate increases. Reuters