Oil and gold prices surged on Monday following a flare up violence in the Middle East, while an ensuing rally in resources-related stocks helped Asian shares gain as what will certainly remain their worst year on record heads to a close. The South Korean won struck a two-month peak as a slow recovery in tolerance for risk boosted some Asian currencies, though the sterling hit a record low against the euro and inched closer to parity due to the different outlook for interest rates. European shares were set for a slightly firmer start, boosted by energy and mining shares on the back of higher commodity prices. Still, expectations for a tough 2009 are being partially reflected by the rally in safe-haven public debt as central banks slash interest rates. Yields for longer-dated Japanese government bonds fell on Monday to their lowest since 2003. Many portfolio managers remain cautious as they wait for more clarity on just how severe the blow to companies is going to be, and whether the prospect of massive government spending combined with deep rate cuts will revive growth in 2009. "Rather than seeing a rebound on value, we want to see companies that can deliver growth in an environment that we have got," said Steven Robinson, a fund manager with Alleron Investment Management in Sydney. Investors may have to contend with yet one more risk factor, this time in the Middle East, in a year that has featured the worst financial crisis in decades, global recession, and the failure of big global lenders such as Lehman Brothers. Israeli warplanes pounded the Hamas-ruled Gaza Strip for a third consecutive day on Monday as the Jewish state prepared to launch a possible invasion amid the intensifying clashes between the two sides.

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