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By Shruti Agarwal

March 2 (Reuters) - Australian shares ended flat on Monday as gains in miners, energy, and gold stocks were offset by a drop in financials, with the breakout of military conflict in the Middle East dampening risk appetite.

The S&P/ASX 200 index .AXJO closed up 0.03% at 9,200.90. The benchmark rose 1.3% last week.

Over the weekend, the U.S. and Israel launched their most significant strikes on Iran in decades, prompting Iran to retaliate with missile barrages across the region.

The conflict shows no sign of easing, with U.S. President Donald Trump warning operations would continue until all U.S. objectives are met.

"The ASX is reflecting a classic geopolitical risk premium. Banks and cyclicals are weaker while energy and gold are stronger, as investors focus on whether disruption through the Strait of Hormuz becomes sustained or fades into a volatility spike," said Marc Jocum, senior product and investment Strategist at Global X ETFs .

Financials .AXFJ fell 1.8%, in their worst session since November 18, with all the "Big Four" banks falling.

Persistent geopolitical uncertainty can erode business confidence, said Cliff Man, CEO of ETF Shares, adding that banks, whose earnings track economic activity and credit demand, may be seeing a pullback amid concerns about global growth.

Airline stocks also fell amid flight cancellations, with Qantas Airways QAN.AX dropping over 5% as investors weighed higher fuel costs and softer travel demand.

Bucking the trend, commodity stocks rose on safe-haven demand, with miners .AXMM jumping 2% to hit record highs.

Gold miners .AXGD rose 4.7% to hit all-time highs as well, as bullion surged. GOL/

Energy stocks .AXEJ cushioned losses further, jumping 5.5% to hit their highest level since July 22, 2024, as oil prices surged.

Woodside WDS.AX and Santos STO.AX rose over 6%.

Meanwhile, New Zealand's benchmark S&P/NZX 50 index .NZ50 ended 0.5% lower at 13,656.65 points.

(Reporting by Shruti Agarwal in Bengaluru; Editing by Rashmi Aich)

((Shruti.Agarwal@thomsonreuters.com))