JERUSALEM, April 15 (Reuters) - Israel's European allies urged it on Monday to show restraint over Iran's weekend missile and drone attack, calling on Israeli leaders to step away from "the edge of the cliff" of escalation in the Middle East.
Israeli Prime Minister Benjamin Netanyahu's war cabinet, which is empowered to decide on the country's response, was set to convene on Monday afternoon, a government source said.
Israeli officials said the war cabinet, which also met on Sunday, favoured retaliation but was divided over the timing and scale of any such response.
With the danger of open warfare erupting between Israel and Iran, and tension high over the war in Gaza, President Joe Biden has told Netanyahu the United States will not participate in any Israeli counter-offensive against Iran, U.S. officials said.
Britain, France, Germany and the European Union's foreign policy chief all joined Washington and United Nations Secretary-General Antonio Guterres in calling for restraint.
United Nations Security Council on the situation in the Middle East
"We're on the edge of the cliff and we have to move away from it," Josep Borrell, the EU's High Representative for Foreign Affairs and Security Policy, told Spanish radio station Onda Cero. "We have to step on the brakes and reverse gear."
French President Emmanuel Macron urged Israel to set its sight on isolating Iran rather than escalating the situation. German Chancellor Olaf Scholz warned Iran not to carry out more attacks and said Israel must also contribute to de-escalation.
Russia has refrained from criticising its ally Iran in public over the strikes but expressed concern about the risk of escalation on Monday and also called for restraint.
"Further escalation is in no one's interests," Kremlin spokesman Dmitry Peskov said.
Iran launched the attack over a suspected Israeli airstrike on its embassy compound in Syria on April 1 that killed seven Iranian Revolutionary Guards officers including two senior commanders.
It followed months of clashes between Israel and Iran's regional allies, triggered by the Gaza war that has spread to fronts with Iran-aligned groups in Lebanon, Syria, Yemen and Iraq.
The weekend attack, involving more than 300 missiles and drones, caused only modest damage in Israel. Most were shot down by Israel's Iron Dome defence system and with help from the U.S., Britain, France and Jordan.
The only serious injury reported within Israel was a seven-year-old who was hurt by shrapnel.
UNCERTAINTY
Asian shares fell and gold prices rose on Monday as risk sentiment took a hit, but oil prices dipped and Israel's shekel rose against the dollar.
"An attack was largely priced in the days leading up to it. Also the limited damage and the fact that there was no loss of life means that maybe Israel's response will be more measured," said Warren Patterson, head of commodities strategy at ING.
"But clearly, there is still plenty of uncertainty and it all depends on how Israel now responds."
Iran's attack also caused travel disruption, with at least a dozen airlines cancelling or rerouting flights, and Europe's aviation regulator reaffirming advice to airlines to use caution in Israeli and Iranian airspace.
Two senior Israeli ministers have signalled that retaliation is not imminent and that Israel will not act alone.
"We will build a regional coalition and exact the price from Iran in the fashion and timing that is right for us," centrist minister Benny Gantz said.
Defence Minister Yoav Gallant said Israel had an opportunity to form a strategic alliance "against this grave threat by Iran."
Israel remained on high alert, but authorities lifted some emergency measures that had included a ban on some school activities and caps on large gatherings.
Iranian army chief of staff Major General Mohammad Bagheri has warned Israel not to retaliate, and told Washington that U.S. bases could be attacked if it helps Israel do so.
Iranian Foreign Minister Hossein Amirabdollahian said Tehran had informed the United States that the attack on Israel would be limited and for self-defence, and that regional neighbours had been informed of the planned strikes 72 hours in advance.
Iranian Foreign Ministry spokesperson Nasser Kanaani said on Monday, however, that no pre-arranged agreement was made with any country prior to the weekend attack. U.S. officials said Tehran had not warned Washington.
