Asian stocks retreated on Monday as Iran's drone attack against Israel sparked worried about inflation and the outlook for interest rates.
Risk appetite weakened while the dollar held firm and gold prices surged amid speculation over whether Israel will retaliate against Iran's unprecedented drone and missile attack on Saturday night, which marked the first time Iran had ever launched a military assault on Israel.
Oil prices fell slightly in Asian trading but there were fears that Brent could surpass $100 a barrel on concerns over potential supply disruptions, as the conflict escalates.

Mainland Chinese stocks rallied after the government pledged more support to stabilize the country's stock markets.

Also helping underpin sentiment, developer China Vanke Co. said it's making plans to resolve liquidity pressure and short-term operational difficulties.

The benchmark Shanghai Composite index jumped 1.26 percent to 3,057.38 while Hong Kong's Hang Seng index settled 0.72 percent lower at 16,600.46.

Earlier today, the People's Bank of China left a key policy interest rate unchanged as widely expected when rolling over maturing medium-term loans.

Japanese markets fell notably amid Middle East tensions and uncertainty over the pace of Fed rate cuts this year.

The Nikkei average ended down 0.74 percent at 39,232.80, recouping much of the day' losses as data showed Japan's core machinery orders rose a much stronger-than-expected 7.7 percent in February from the previous month. The broader Topix index settled 0.23 percent lower at 2,753.20.

Tech stocks such as Advantest and SoftBank Group fell 1-2 percent while drugmaker Astellas plunged 8 percent and department store operator Takashimaya plummeted 6.7 percent on disappointing earnings.

Seoul stocks closed lower while the won hit a 17-month low as investors awaited Israel's future course of response. The Kospi average dropped 0.42 percent to 2,670.43.

Korean Airlines, Samsung Electronics and Asian Airlines lost 1-3 percent while refiner S-Oil gained 1.7 percent on hopes for higher petrochemical product prices.

Australian markets finished lower, though a surge in metal prices boosted some mining stocks. The benchmark S&P ASX 200 slipped 0.46 percent to 7,752.50 while the broader All Ordinaries index ended down 0.51 percent at 8,009.40.

Across the Tasman, New Zealand's benchmark S&P NZX-50 index slid 0.12 percent to 11,916.78 after the release of weak service sector activity data for March.

U.S. stocks tumbled on Friday as inflation concerns continued to weigh, geopolitical tensions escalated and earnings and guidance from big banks disappointed.

U.S. consumer sentiment ebbed in April while inflation expectations for the next 12 months and beyond increased, a survey showed.

The Dow dropped 1.2 percent, the S&P 500 lost 1.5 percent and the tech-heavy Nasdaq Composite shed 1.6 percent.