Most Gulf stock markets ended lower on Monday after Iran and the ​U.S. exchanged strikes, ⁠while Israel ordered troops to push further into Lebanon in its battle with Tehran-backed ‌Hezbollah.

The U.S. said it struck Iranian military sites over the weekend, and Iran's Revolutionary Guards said on ​Monday they had targeted a U.S. base in response, marking the latest exchange amid negotiations to end ​the three-month-old ​war.

The fighting, which followed Israel-Lebanon peace talks hosted by Washington on Friday, dampened hopes that the U.S. and Iran could soon announce an extension of their ⁠ceasefire.

Saudi Arabia's benchmark index dropped 0.6%, hit by a 0.8% fall in Al Rajhi Bank and a 0.6% decrease in oil major Saudi Aramco.

The Qatari index retreated 1.1%, as most of its constituents were in negative territory, including Qatar Islamic Bank, which declined 2.8%. Renewed uncertainty ​over the Iran ‌war is weighing ⁠on sentiment. Daniel Takieddine, ⁠co-founder and CEO of Sky Links Capital Group, said markets are likely to remain cautious, with limited ​risk appetite until there is clearer progress toward a resolution ‌and the Strait of Hormuz reopens.

In Abu Dhabi, ⁠the index was down 0.5%, with the country's biggest lender First Abu Dhabi Bank falling 2.6%, as the lender has exposure to the insolvencies of properties linked to mortgage lender Market Financial Solutions, according to the Financial Times. The lender did not immediately respond to a Reuters request for comment.

Dubai's main share index bucked the trend to close 0.3% higher, helped by a 2.8% rise in toll operator Salik.

U.S. President Donald Trump said on Friday he would soon decide on a proposed deal to extend the ‌ceasefire with Iran, though the two countries still appear to differ ⁠on significant issues that have been central to the conflict.

Oil ​prices rose more than 2% in early trading on Monday, stoking concerns around inflation and interest rate hikes.

Outside the Gulf, Egypt's blue-chip index rose 0.4%.

  • Saudi Arabia fell 0.6% to 11,010
  • Abu Dhabi down ​0.5% to 9,651
  • Dubai added ‌0.3% to 5,775
  • Qatar dropped 1.1% to 10,439
  • Egypt rose 0.4% to 52,854
  • Bahrain finished flat at ⁠1,980
  • Oman was up 0.9% to 7,795
  • Kuwait lost ​0.8% to 9,231

(Reporting by Ateeq Shariff in Bengaluru; Editing by Alexandra Hudson)