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Safe haven assets gain after Paris attacks

Government bond markets sell off, bond rout continues German bund
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Investors scurried into assets perceived to be safe Monday after the weekend attacks in Paris that left 129 dead, sending gold and crude oil prices higher.

On Monday, spot gold prices rose as much as 1 percent to the session high of $1,093.310 an ounce with $316 million or about 3,000 lots changing hands in the first 10 minutes of trade – almost the 10 times the 300-lot average of the first ten minutes of market opening in the last two months, Reuters calculations showed.

Other precious metals such as silver, platinum and palladium rose over 1 percent.

The euro meanwhile came under heavy selling in the wake of the attacks with the euro falling almost 1 percent to 130.62 against the Japanese yen—its worse level since late-April this morning. DBS Group Research said the fall in yen against the euro reflected better flight to safety that the other safe haven currency, the Swiss Franc, due to Switzerland's proximity to France.

The single currency did recover during European trading hours to reach 132.05 yen.

Stocks in Asia and Europe also fell, with the latter managing to pare losses by midday.

Still, selling yen crosses faces the risk of the Bank of Japan turning dovish at its two-day monetary policy meeting that starts on Wednesday after the economy returned into a technical recession after real GDP growth contracted for the second straight quarter in the third quarter, added DBS.

The EUR/USD fell to a near six-and-a-half month low while the price of U.S. 10-yield treasury note yield rose. The yield, which moves inversely to prices, fell to 2.25 percent. German 2-year government bond yields hit a record low of -0.382 percent on Monday morning.

Despite the nervousness in the market, oil prices, which typically climb when investors are nervous, are not gaining as much as they would have due to underlying weak fundamentals.

Brent oil prices rose over 1 percent while US Nymex oil prices moved up 2.5 percent.

Oil prices, which usually spike in the event of accentuated geopolitical risk in the Middle East, are more muted this time even as France launched air strikes against Islamic stage targets in Syria on Sunday night, potentially disruption oil infrastructure and supply.

"Geopolitical risk would rather speak in favor of rising oil prices rather than declining oil prices but of course, you can always…say the attacks are now triggering a more coordinated response against IS that eventually removes some of the geopolitical risk that again means that it's probably bearish for oil," energy consultant JBC Asia's founder and managing director, Johannes Benigni, told CNBC's Squawk Box on Monday.

"(Oil) is important for IS if they are selling 10,000 or 20,000 barrels of oil a day but in the bigger scheme of things, in the oil market, that's not really an issue."