US President Joe Biden has urged Israel to show restraint after Iran’s drone and missile attack, as Washington seeks to reduce the risk of a full-blown regional war.

With Benjamin Netanyahu’s war cabinet due to meet again on Monday, France and the UK also called on it to avoid escalating the crisis, with President Emmanuel Macron warning of the risk of “a conflagration in the region”.

The war cabinet met on Sunday to consider the Jewish state’s response to Iran’s attack, but had not yet made a decision on what action it would take, an Israeli government insider said.

The person added it was clear that Israel had to respond, “but just unclear when and how big”.

But on Monday UK foreign secretary Lord David Cameron echoed Biden’s call on Israel to “take the win” from its success in foiling the Iranian strike and not to escalate the crisis further.

“We are saying very clearly we don’t support a retaliatory strike,” Cameron told the BBC’s Today Programme. “We don’t think they should make one.”

Macron said France would “do everything to avoid a conflagration in the region,” adding that he would speak to Netanyahu later in the day.

 Iran’s attack was the first such assault from its own territory against Israel. Tehran was retaliating for a suspected Israeli strike on its consular building in Damascus this month that killed several Iranian commanders.

Initial market reaction to Saturday’s attack was muted. Brent crude, the international oil benchmark, edged down as trading began in Asia.

“Oil has already priced in a lot of risk premium,” said Redmond Wong, market strategist at Saxo Markets in Hong Kong.

Most Asian stock markets opened lower on Monday but the Japanese yen — often seen as a haven from market turmoil — weakened against the dollar, touching its lowest level since 1990.

European stocks also marginally rose.

Iran’s strike came amid a wave of hostilities triggered by Hamas’s October 7 attack on Israel, and the Jewish state’s retaliatory response against the Palestinian militant group in Gaza. It has intensified concerns that it will prompt an escalatory response from Israel and push the Middle East into a full-blown conflict.

Israel was discussing its options with all its main partners, especially the Biden administration, but the decision would ultimately rest with Netanyahu’s war cabinet, the government insider said.

War cabinet member Benny Gantz said earlier on Sunday that Israel would respond “in the way and at the time that suits us”.

Biden had counselled Israel to take a measured approach. “The president has been clear. We don’t want to see this escalate,” said John Kirby, spokesperson for the US National Security Council, on NBC’s Meet the Press. “We’re not looking for a wider war with Iran.”

In a telephone call with Netanyahu after Iran’s attack, Biden told his Israeli counterpart that Israel had “come out far ahead” of the Islamic republic, a senior US official said. Biden said Israel had “clearly demonstrated its military superiority”, the official added.

Israeli officials said Iran had fired more than 300 projectiles, including 170 drones, 30 cruise missiles and 120 ballistic missiles at Israel beginning late on Saturday night and continuing over the course of several hours.

Iran-backed militants in Lebanon, Iraq and Yemen also fired rockets, drones and missiles at Israel.

Daniel Hagari, a spokesman for Israel’s military, said 99 per cent of the barrage had been intercepted. A girl was critically injured by shrapnel in the south of the country and an air force base suffered minor damage, but there were no other reports of serious impacts, he added.

Hardliners in Netanyahu’s government demanded decisive action. “We need a crushing attack,” Itamar Ben-Gvir, the ultranationalist national security minister wrote on X, while Bezalel Smotrich, finance minister, said that if Israel “hesitates” then “we will put ourselves and our children in existential danger”.

General Mohammad Bagheri, chief of staff of the Iranian armed forces, said by targeting the Iranian consulate in Damascus in an attack on April 1, Israel had “crossed a red line that was unbearable”.

“The mission is accomplished and the operation is over and we have no intentions of going further,” Bagheri said, but if Israel opted to “commit any act against us, be it on our territory or our compounds in Syria and elsewhere, the next operation will be larger”.

Charles Michel, president of the EU Council, said a crisis meeting of G7 leaders on Sunday had “unanimously condemned Iran’s unprecedented attack against Israel”.

“All parties must exercise restraint. We will continue all our efforts to work towards de-escalation,” he added.

G7 leaders discussed possible additional sanctions against Iran in response to the attack, but no consensus was found on how they should be applied, a person briefed on the discussion said.

António Guterres, UN secretary-general, condemned Iran’s attack but urged the organisation’s members not to further escalate tensions in the Middle East through reprisals against the Islamic republic.

Additional reporting by William Sandlund in Hong Kong