Oil prices extended a rally Wednesday after Iran's missile attack on Israel fanned fears of a Middle East-wide conflict, while the Hong Kong market ploughed on with its China-fuelled surge as developers saw eye-watering gains.

News of the launches rattled US and European traders and sparked a sell-off on most markets, though Asia fared slightly better, with Hong Kong jumping more than six percent as it reopened after a one-day break.

Both main crude contracts shot up more than five percent at one point Tuesday after Iran fired dozens of missiles at Israel in response to the killings of Tehran-backed militant leaders.

Washington said it was discussing a joint response and warning of "severe consequences" and Israel vowed it would make Iran "pay" for the launch. Tehran threatened to hit all Israeli infrastructure if attacked.

"The burning question is whether Iran's missile strike is a one-off response or the start of something much bigger. Most bets lean towards the former, especially with the US stepping in to back Israel," said independent analyst Stephen Innes.

"Iran's oil infrastructure could very well be in their crosshairs. Taking a swing at Iran's oil lifeline could have far-reaching economic consequences, sparking a severe escalation," Innes wrote in his "The Dark Side Of The Boom" newsletter.

Demand for gold -- a go-to in times of uncertainty and turmoil -- pushed the precious metal close to its $2,685 record.

All three main indexes on Wall Street ended in the red, with the Nasdaq down more than one percent.