By Adrian Black in Sydney

Australia’s share market has clawed back some early losses for a flat finish as investors weigh the escalating conflict in the Middle East and markets tip hostilities will be “short and sharp”.

The S&P/ASX200 rose 2.3 per cent points on Monday, up 0.03 per cent to 9,200.9, as the broader All Ordinaries lost five points, or 0.05 per cent, to 9430.6.

The bourse had dipped sharply – as the first major stock market to open after US and Israeli air strikes killed Iran’s supreme leader, sparking a wave of retaliatory strikes from the Islamic republic and its proxies – before narrowing losses in the afternoon.

“It’s a difficult one, because it really depends on how long this conflict goes on for, but I think the market is pricing in somewhat a short and sharp conflict,” CommSec equities strategist James Gruber told AAP.

The Australian dollar is buying 70.94 US cents, slipping from 71.26 US cents on Friday at 5pm, tracking with major currencies as the greenback benefited from its safe-haven status.