Asian shares and bond yields plummeted on Friday as reports surfaced of Israel launching an attack on Iran, escalating concerns of a broader conflict in the Middle East.

However, the market reaction was tempered following revelations that the Israeli strike was limited, and Iranian officials refuted claims of any missile launches against their territory.

MSCI’s broadest index of Asia-Pacific shares nosedived by 2% after an earlier steep drop of 2.6%, while U.S. stock futures indicated a 1% decline, retracing some of the initial 1.7% plunge.

Iranian authorities asserted that they had downed several drones and denied any missile attacks after explosions were reported near Isfahan, close to nuclear facilities. State TV confirmed that the reactors remained undamaged.

ABC News initially reported Israeli missiles hitting a site in Iran. However, fears of retaliation eased after the Israeli military clarified that early warning sirens in northern Israel were a false alarm.

U.S. long-term Treasury yields slid by 9 basis points to 4.5567% after dropping as much as 15 bps. The safe-haven yen initially surged 0.7% against the dollar but pared gains to about 0.3%. The Swiss franc also moderated, up by 0.6% versus the dollar after climbing as high as 1.2% earlier.
Gold rose by 0.6%, having peaked at 1.7% earlier at $2,417.59, nearing last week’s all-time high at $2,431.29.

Brent futures spiked by as much as 4.2% due to concerns of potential disruptions in the Middle East’s oil supply, but they settled at a 2.4% increase to $89.22. According to Reuters data, Iran ranks as the third-largest oil producer in OPEC.

Bitcoin slumped by up to 6.2% to a 1-1/2-month low of $59,590.74 before recovering to trade 2.7% lower at $61,842.

Israeli Prime Minister Benjamin Netanyahu had previously vowed retaliation following Iran’s extensive drone and missile attacks on Israel on April 13, purportedly in response to an Israeli strike in Syria on April 1 that killed senior Iranian military commanders.