However, the scope was mitigated somewhat as details emerged the Israeli attack was limited and Iranian officials denied any missiles were launched against it.
Asian shares and bond yields sank on Friday while safe-haven currencies, gold and crude oil jumped after reports Israel attacked Iran in a continuing series of assaults that have increased concerns of a wider conflict in the Middle East, Reuters reports.
However, the scope was mitigated somewhat as details emerged the Israeli attack was limited and Iranian officials denied any missiles were launched against it.
Reuters reports that MSCI's broadest index of Asia-Pacific shares (.MIAP00000PUS) opens new tab dropped 2%, after earlier diving as much as 2.6%, and U.S. stock futures pointed 1% lower, retracing part of an initial 1.7% slide.
Iran said it shot down several drones and there had been no missile attack after explosions were heard near the central city of Isfahan, close to several nuclear sites.
Those reactors were not damaged, state TV reported.
ABC News reported earlier that Israeli missiles hit a site in Iran.
Fears of an Iranian response eased after the Israeli military said that warning sirens which sounded early on Friday in northern Israel were a false alarm.
U.S. long-term Treasury yields were last down 9 basis points (bps) at 4.5567%, after earlier dropping as much as 15 bps. The safe-haven yen had rallied as much as 0.7% against the dollar but was last up about 0.3%.
The Swiss franc was about 0.6% higher versus the dollar, paring earlier gains of as much as 1.2%.
Gold added 0.6%, but was earlier up as much as 1.7% at $2,417.59, taking it just shy of last week's all-time high at $2,431.29.
"The lack of clarity on...what Iran might do next will keep investors nervous and market volatile for now, at a time when investors are faced with significant inflation and interest rate uncertainties as well," said Vasu Menon, managing director of investment strategy at OCBC.
Brent futures surged as much as 4.2% on concerns Middle East supply could be disrupted but were last up 2.4% at $89.22.
Iran is the third-largest oil producer of the Organisation of the Petroleum Exporting Countries, according to Reuters data.
Bitcoin dropped as much as 6.2% to a 1-1/2-month low of $59,590.74, before last trading about 2.7% lower at $61,842.
Israeli Prime Minister Benjamin Netanyahu had vowed retaliation earlier this week after Iran launched hundreds of drones and missiles in an unprecedented direct attack on Israel on April 13.
That attack was in response to an Israeli strike on April 1 on an Iranian embassy compound in Syria that killed senior Iranian military commanders.
A source familiar said Israel had informed the United States in advance of its attack on Iran.