At noon AEDT on Monday, the benchmark S&P/ASX200 index was down 38.8 points, or 0.57 per cent, at 6,829.5, while the broader All Ordinaries fell 35.7 points, or 0.51 per cent, to 7,016.1.
The ASX200 had hit a new low for 2023 of 6,755.7 shortly after the open before recovering somewhat.
The risk-off trading comes off a slide of 1.1 per cent last week - the fifth week of losses out of the past six - pressured by higher bond yields, rising interest rate expectations and anxieties that regional players will get sucked into a wider conflagration arising from Israel's war with Hamas.
Foreign Minister Penny Wong on Monday said she remained concerned the conflict could spill over into other areas of the Middle East.
The West Texas Intermediate benchmark fell 2.9 per cent last week to $85.54 due in large part to restive conditions in the oil-producing region.
"Headlines around Gaza and, more broadly, around escalating geopolitical tensions in the Middle East will continue to make for choppy, volatile trading conditions in crude oil this week," IG market analyst Tony Sycamore said.
Every sector was in the red at midday except for materials and IT, while telecommunications stocks were flat.
Energy was the worst hit, down 1.9 per cent, with oil giant Woodside sliding 1.9 per cent and Whitehaven Coal 3.9 per cent lower.
Miners were a bright spot on the index, with BHP up 0.1 per cent, Fortescue Metals 0.2 per cent higher and Rio Tinto climbing 0.7 per cent.
Goldminer Evolution firmed 1.7 per cent, while mining minnow Tietto surged 33.53 per cent to 56.75c after Chinese goldminer Zhaojin offered a 58c per share takeover bid, representing a premium of 38 per cent on the previous close.
Accounting software provider Xero was the pick of the tech stocks, up 2.6 per cent to $107.39.
The big banks were lower, with CBA down 1.4 per cent, while NAB, ANZ and Westpac contracted 1.6 per cent, 1.1 per cent and 0.6 per cent respectively.
Liquor and hospitality giant Endeavour Group fell 1.6 per cent to $4.94 after investors scoffed at a 2.1 per cent increase in revenue for the September quarter.
Retail sales at the group rose 1.9 per cent as shoppers traded down to value products amid rising cost of living pressures.
Qantas lifted one per cent higher after announcing it would fight allegations of misleading conduct by the consumer watchdog.
The erstwhile consumer darling denies it misled customers by selling tickets for flights already cancelled, arguing the Australian Competition and Consumer Commission case ignores the realities of the aviation industry.
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