Oil rises as Israel launches airstrikes in Gaza

Benchmark oil rose 94 cents to finish at $86.32 per barrel in New York. Brent crude, used to price international varieties of oil, rose $1.14 to $108.48 per barrel in London.

Israeli leaders said the airstrikes, which killed a Hamas military commander, were the start of a broad operation in response to days of heavy rocket fire from militants in the neighboring Palestinian territory.

Meanwhile global economic issues and the "fiscal cliff" in the U.S. are still in focus. Unless President Barack Obama and Congress reach a compromise, a series of expiring tax cuts and broad spending cuts will take effect in January, seriously impacting the world's largest economy.

Elsewhere official figures showed industrial production dropped 2.5 percent in September in the 17 countries that use the euro as currency. It was the largest monthly decline since January 2009.