Australian shares inch up as Middle East tensions spur gold, oil prices

Australian shares recouped early losses to post a marginal gain on Monday as escalating tensions in Middle East buoyed shares of oil producers and gold miners.

The S&P/ASX 200 index ended up 2.2 points at 6,735.7, with the big banks registering heavy losses that offset the gains elsewhere.

Tensions between Washington, Iran and Iraq ramped up after US President Donald Trump threatened retaliation if Iran attacked any American asset in reply to a US airstrike in Iraq that killed top Iranian commander Qassem Soleimani on Friday.

With global risk appetite walloped, anxious investors increasingly turned to safer avenues such as bullion.

This drove the gold sector more than 3% higher, with heavyweights Newcrest Mining Ltd and Evolution Mining Ltd soaring 3.9% and 6.8%, respectively.

Shares of energy firms also climbed as crude oil prices rallied on fears of supply disruptions in the Middle East.

Australia's biggest oil and gas producer Woodside Petroleum Ltd closed 1.7% higher, while smaller peer Santos Ltd rose 2.1%.

On the flipside, strengthening oil prices threatened to bloat costs for airline operators such as Qantas Airways and Virgin Australia Holdings, sending their shares down 2.6% and 6.5%, respectively.

Australia's "Big Four" banks weighed the most on the benchmark index, losing between 0.1% and 0.7%.

Bega Cheese Ltd slumped 9.3% slump as bushfires raging across Australia impacted its dairy farm suppliers and employees.

New Zealand's benchmark S&P/NZX 50 index rose 0.3% or 34.18 points to finish at 11,627.32.

Utilities provider Infratil Ltd was the top gainer and added 3.5% to end at a record high.