LIVE MARKETS-Fear of Middle East war contagion makes investors risk-shy

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FEAR OF MIDDLE EAST WAR CONTAGION MAKES INVESTORS RISK-SHY

Wall Street tanked at the top of a new week and the month as the U.S.-Israel war against Iran and fears of a broadening conflict in the Middle East spooked investors away from riskier assets in favor of safe havens such as gold.

All three major U.S. indexes followed their global counterparts sharply lower fresh out of the gate, each plummeting around 1% before paring losses.

The CBOE Market Volatility Index .VIX, often referred to as the "fear index," initially jumped to its highest level since November 21.

Energy stocks .SPNY are the biggest outperformers among the S&P 500's major sectors, benefiting from a solid boost from surging crude prices CLc1, LCOc1 as rising geopolitical heat prompted supply concerns. Aerospace/defense stocks, as one might expect, also enjoyed early gains. The S&P Aerospace Defense index .SPCOMAED is up 2.0%.

Tourism and leisure-related stocks are clear underperformers, with the S&P 1500 Airlines .SPCOMAIR and hotel/restaurant/cruise indexes .SPCOMHOTL are sliding 2.4% and 4.4%, respectively.

On the economics front, two takes on U.S. goods makers showed factory activity showed continued to expand in February; however, the Institute for Supply Management's purchasing managers' index lost some momentum, while S&P Global's manufacturing PMI gained a bit of steam. Both indexes remained above 50, indicating monthly expansion.

Stocks pared a bit further following the ISM report.

Here's where things stood as of 10:02 EST:

(Stephen Culp)

EARLIER ON LIVE MARKETS:

US STOCK FUTURES SLIDE AMID MIDDLE EAST CONFLICT CLICK HERE

THREE VARIABLES ALLIANZ GI IS WATCHING AMID MIDDLE EAST CONFLICT CLICK HERE

MIDDLE EAST CONFLICT: WHAT IT MEANS FOR THE BOE, ECB CLICK HERE

HOLD YOUR NERVES - BARCLAYS CLICK HERE

STOXX SHUDDERS AS IRAN CONFLICT LIFTS OIL, SINKS TRAVEL CLICK HERE

BEFORE THE BELL: EUROPE'S FUTURES DOWN SHARPLY; DEFENCE, AIRLINES, OIL STOCKS ON THE RADAR CLICK HERE

DIRE STRAITS FOR GLOBAL OIL TRADE CLICK HERE