By Saqib Iqbal Ahmed, Suzanne McGee and Linda Pasquini NEW YORK/GDANSK (Reuters) -Investors were on edge ahead of markets reopening late on Sunday, with risks ranging from heightened prospects of a broad Middle East war to U.

If prices go up, Fed officials may be inclined to raise its benchmark rate, raising borrowing costs for businesses and consumers. That could lead to businesses to cut jobs, particularly in the high-growth tech sector, and force Americans to pull back on spending, which drives more than 70% of economic activity in the U.S.

Entering the meeting, markets are pricing two interest rate cuts from the Fed in 2025, in line with the central bank's median dot plot projection from March. But since then, there have been significant changes to tariff policy, which will put any updates to the Fed's outlook in particular focus.

The Israeli military warns Iranians to evacuate arms factories, signaling what could be a further widening of the campaign.

The Indian rupee is expected to slip past 86 to the U.S. dollar at the open on Friday, hit by surging oil prices and sliding risk assets after Israel attacked targets in Iran.

Israel’s attack on Iran has catapulted their long-running conflict into what could become a wider, more dangerous regional war and potentially drive prices higher for both businesses and households

Starmer has not ruled out offering air support to defend Israel from Iranian attacks, as additional RAF fighter jets and other military aircraft were deployed to the Middle East.

U.S. ultra-low sulfur diesel futures hit the highest level since February, outpacing gains in oil and gasoline as analysts warned that diesel supply is the most exposed to the conflict in the Middle East.

President Donald Trump has repeatedly demanded the Federal Reserve slash interest rates. But Fed officials have stood pat, waiting to see how his administration’s sweeping policy changes affect the economy first.

The US ordered some staff to leave its embassy in Baghdad, and restricted government employees and family members in Israel from traveling outside major cities like Tel Aviv. Around the same time, risk warnings from naval forces were issued to vessels operating in and around the Persian Gulf,