*

Oil falls on reports Iran sought a ceasefire

*

U.S. stock indexes follow global counterparts higher

*

Busy central bank week ahead

(Updates asset prices at 2:34 p.m. ET)

By Isla Binnie

NEW YORK, June 16 (Reuters) - Stock indexes stayed

higher after last week's losses and a barrel of oil got $1

cheaper on Monday as investors took heart from reports that Iran

was seeking to end hostilities with Israel, and stayed confident

in their predictions for a busy week of central bank meetings.

Oil prices fell after the Wall Street Journal reported Iran

was seeking a truce following a surprise attack from Israel on

Friday that raised fears of wider conflict, sent oil soaring,

and weighed on stocks.

Sources told Reuters that Iran has asked regional allies to

press U.S. President Donald Trump to influence Israel to agree

to a ceasefire.

Geopolitics still loomed, with early cracks threatening to

emerge among Group of Seven leaders, who are meeting in Canada.

Officials gave conflicting statements about whether Trump would

sign a draft statement calling for de-escalation of the Middle

East conflict.

"In terms of an escalation, where the U.S. is going to get

involved or where it's really going to be all-out war, where

nothing is sacred anymore, I don't think that's going to

happen," said Peter Cardillo, Chief Market Economist at Spartan

Capital Securities in New York.

"It's probably a short-lived situation, so I think the

market is rallying on that."

Following a torrid session on Friday, Brent crude futures

settled at $73.23 per barrel, down $1.00 or 1.35%.

The Dow Jones Industrial Average was 0.75% higher in

afternoon trading, slightly off the morning's highs. The S&P 500

gained 0.90% and the Nasdaq Composite rose 1.45%.

U.S. Treasury yields rose after initially falling on the

reports of Iran's outreach to Israel, with the 10-year notes

yielding 4.452%, from 4.424% late on Friday.

MSCI's gauge of stocks across the globe

marched 1.09% higher after the U.S. open and stayed stronger on

the day to be quoted at 0.85%.

Earlier in the trading day, Europe's STOXX 600 had

been boosted by a rebound in travel stocks and Gulf

stocks also recovered.

Chinese blue chips gained after data showed rising

retail sales and industrial output in line with expectations.

FED MEETING IN FOCUS, MORE DATA TO COME

A prolonged rise in oil prices could contribute to

inflation, but the movements of recent days are unlikely to

strongly influence discussions when the Federal Reserve meets on

Wednesday, said Emily Roland, co-chief investment strategist at

Manulife John Hancock Investments.

"The Fed is data-dependent, and it takes time for the impact

of oil prices (higher or lower) to feed into the inflation

numbers," Roland said.

"In our view, the Fed likely keeps the markets waiting with

no change to the view of between 2-3 rate cuts of 0.25% by the

end of the year. The bond market is still pricing in two cuts

over the year, we will see if this week changes things."

U.S. retail sales data is due on Tuesday and may show a

pullback in autos, dragging the headline number down even as

core sales edge higher. A market holiday on Thursday means

weekly jobless claims figures are out on Wednesday.

Central banks in Norway and Sweden also meet this week, with

the latter expected to trim rates.

The Swiss National Bank meets on Thursday and is considered

certain to cut by at least a quarter point to take rates to

zero, with some chance it may go negative given the strength of

the Swiss franc.

The Bank of Japan holds a policy meeting on Tuesday and is

widely expected to hold rates at 0.5%, while leaving open the

possibility of tightening later in the year.

There is also speculation it could consider slowing the

rundown of its government bond holdings from next fiscal year.

The calmer mood across markets saw some of gold's safe-haven

bid reverse and it was down 1.24% to $3,389.71 an ounce..