Oil prices surged by nearly 3% as more corporations banned Red Sea transportation following attacks on vessels by Yemen's Iran-backed Huthi rebels.

Meanwhile, US equities attempted to extend last week's surgeon anticipation that the US Federal Reserve will decrease interest rates next year, albeit the advance appeared to have stalled in Asia and Europe.

PHOTO | COURTESY Oil Prices Surge Following Red Sea Attacks

Yemen's Iran-backed Huthi rebels said Monday they had attacked two "Israeli-linked" ships in the Red Sea, the latest in a flurry of drone and missile assaults on vessels entering the Red Sea aimed at putting pressure on Israel over its Gaza Strip conflict with Hamas.

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Five major shipping companies, including three of the world's largest, have said their vessels will be diverted from the Red Sea. On Monday, British oil company BP and Taiwan's Evergreen became the latest companies to halt transit.

Ships must pass the Red Sea to access the Suez Canal, a vital freight and oil transit route.

Investors are also watching the Bank of Japan's meeting this week, though optimism that it could abandon its policy of not raising interest rates has diminished.

PHOTO | COURTESY Yemen's Iran-backed Huthi rebels

Equity indices are still on track to end the year on a high note, despite the Fed's suggestion this week that it will begin relaxing monetary policy as US data suggests inflation is falling and the economy is on track for a gentle landing.

The Dow and Nasdaq achieved record highs on Wall Street last week as tech stocks rose, but the buying frenzy halted Friday as investors took a breather, as analysts predicted after the advances.

The CAC 40 in Paris and the DAX in Frankfurt reached all-time highs last week.

"We're into the final furlong and unless there's a big surprise then we're looking at some very healthy gains for the most part in 2023," noted Neil Wilson, chief market analyst at Finalto Trading Group.

Several Fed members queued up last week to quell hopes that rates will be cut next year. Some analysts projected up to six cuts, while the bank's "dot plot" forecast only three.