Most Asian markets fell on Monday after a US-led strike on Syrian targets fueled fresh concerns over the tinderbox Middle East, though analysts said investors were hopeful the crisis would not escalate.

The US, Britain and France carried out attacks at the weekend on alleged chemical weapons facilities, in response to what they say was a toxic gas attack by the Russia-backed Assad regime a week before.

While there was broad support for the mission, Moscow condemned it as illegal and warned it would provoke “chaos” in international relations.

The Syria crisis, which has seen the West's relationship with Russia grow increasingly frosty, has encompassed other regional players including Iran, Saudi Arabia and Israel, and led to talk of a military standoff.

It also comes against the backdrop of a trade dispute between the United States and China. Many fear this could hammer the global economy if the two sides push through threatened tit-for-tat tariffs on billions of dollars' worth of goods.

Most markets were down on Monday but the losses were limited.

Hong Kong fell 1.7 percent in the afternoon, while Shanghai had slipped 1.5 percent at the close, with traders there awaiting the release Tuesday of first-quarter Chinese growth data.

Property firms in Hong Kong took a hit on fears of an end to the era of low interest rates as the city's de facto central bank is forced to support the local dollar, which is at the lowest end of its band with the greenback.

The Hong Kong Monetary Authority has spent more than US$1 billion boosting the currency, which has been hit by a flow of cash out of the city to the United States in search of higher interest rates, according to APP.

Chang Liu, China economist at Capital Economics, warned there was a concern that the HKMA's move would raise interest rates in the city, which could hammer the property market — among the world's most expensive — and have a knock-on effect for the economy.

Singapore fell 0.2 percent, while Wellington and Taipei also declined.

'Mission accomplished'

However, Tokyo ended in positive territory, up 0.3 percent, while Sydney edged up 0.2 percent and Seoul 0.1 percent.

“The markets are taking the surgical strike at the heart of Syria's chemical weapon programme in their stride as traders had priced in this outcome with a high degree of probability,” Stephen Innes, head of Asia-Pacific trade at OANDA, said in a note.

“Given the universal condemnation (of the chemical attack) and overwhelming support for this military action, it's improbable there will be retaliation from Russia or Iran, Syria's principal backers, and for the time being, the US-UK-France alliance is considering this a mission accomplished.”

And Callum Henderson, a Eurasia Group managing director in Singapore, told Bloomberg TV: “There was a significant fear of potential escalation: that hasn't happened so far.”

But he added that “it remains to be seen how long this market rally lasts on the back of this specific factor — whether or not, or when, Russia retaliates”.

The troubles in the oil-rich Middle East have helped push the price of crude to highs not seen since the end of 2014, though both main contracts slipped in early trade Monday.

And the dollar managed to hold its own against the safe haven yen despite the uncertainty, while gold — another go-to asset in times of turmoil — is sitting near two-year highs.

In early European trade London was flat and Frankfurt rose 0.4 percent.

Key figures

Tokyo – Nikkei 225: UP 0.3 percent at 21,835.53 (close)

Hong Kong – Hang Seng: DOWN 1.7 percent at 30,290.82

Shanghai – Composite: DOWN 1.5 percent at 3,110.65 (close)

London – FTSE 100: FLAT at 7,263.57

Euro/dollar: DOWN at $1.2334 from $1.2338 at 2100 GMT on Friday

Dollar/yen: DOWN at 107.30 yen from 107.35

Pound/dollar: UP at $1.4255 from $1.4241

Oil – West Texas Intermediate: DOWN 58 cents at $66.81 per barrel

Oil – Brent North Sea: DOWN 72 cents at $71.86 per barrel

New York – Dow: DOWN 0.5 percent at 24,360.14 (close)