* US and Iran agree peace proposals, to open Strait of

Hormuz

* Nikkei, Kospi, DAX and CAC40 all surge, Wall St futures

jump

* US dollar eases as Treasury yields fall

* Markets pare risk of interest-rate hikes globally

(Updates ahead of US market open)

By Marc Jones

LONDON, June 15 (Reuters) - Share markets and bonds rallied

on Monday and oil prices tumbled 5% as a framework peace deal

between the United States and Iran was expected to ease

inflationary pressures globally and lessen the need for higher

interest rates.

Europe's optimism drove both the STOXX 600 and FTSE

Eurofirst to records. Asia's biggest markets had all

leapt overnight, while futures markets pointed to

gains of 1.3% to 2% for Wall Street later.

The U.S. and Iran said they had agreed to end their war and

reopen the Strait of Hormuz, news that brought relief to oil

traders although the pact may hinge on an end to Israel's

hostilities in Lebanon - and defers talks on Tehran's nuclear

programme.

Trump will meet Middle Eastern leaders and attend a working

session with Ukrainian President Volodymyr Zelenskiy during a G7

summit in France this week.

Iran said traffic through the Strait of Hormuz would be

regulated by Tehran and Oman, a potential blow to the rules of

free trade that suggests there might be a toll of some kind on

transits.

Saxo Bank strategist John Hardy said the peace deal was

"about as supportive as you can get" for markets, especially

after the excitement triggered by the recent record-breaking $75

billion SpaceX IPO.

"What do you add on from here to get sentiment even

bubblier?"

The news will be a relief for the crowd of central banks

meeting this week, easing some pressure to tighten policy to

head off an energy-driven rise in inflationary expectations.

Markets had already priced in a likely deal but the

confirmation was enough to send Brent crude down 5%, to

$83 a barrel, well off its May peak of $126.41, albeit still

above the $67 it traded at before the war began in late

February.

"We see Brent oil futures falling to $80 by the end of the

year, assuming the strait does not close again," said Vivek

Dhar, a mining and energy analyst at CBA.

"Our forecast implicitly assumes that oil and refined

product exports can resume quickly through the Strait of Hormuz,

but this view carries considerable uncertainty tied to the

damage to oil and refinery assets."

The prospect of cheaper oil will be a boon to Japan which is

a net importer of energy.

Overnight the Nikkei had surged 5%. South Korea's

red-hot market gained 5.2%, and Chinese blue chips

firmed 1.4%. MSCI's broadest index of Asia-Pacific

shares outside Japan rose 2.4%.

Before the bell on Wall Street, United Airlines rose

4.5% and Delta and American Airlines ( AAL ) added 4%

each. Norwegian Cruise and Carnival made

similar gains.

RELIEF FOR CENTRAL BANKS

Central banks of the United States, Britain, Japan,

Australia, Switzerland, Sweden, Norway and Russia are set to

hold policy meetings this week, with Japan considered likely to

lift rates this time.

The Federal Reserve is widely expected to leave rates at

3.50% to 3.75% on Wednesday at Chair Kevin Warsh's debut

meeting. The statement, economic projections and news conference

will be scrutinised for any signs of the Fed dropping its easing

bias as officials grow more hawkish on inflation risks.

Saxo Bank's Hardy said the change of hands was set to be the

biggest at the world's most influential central bank since Ben

Bernanke succeeded Alan Greenspan in early 2006.

"The whole communication strategy is going to be completely

different under Warsh," he said. "They are going to hold their

cards a lot closer to their chest."

Investors were quick to trim the chance of a Fed hike this

year, with December futures edging up four ticks while a

move as early as October is now priced around 30%.

Treasuries rallied on hopes that oil prices would now fall

sustainably and lessen the upside risks for inflation.

Yields on 2-year notes dropped 6 basis points

to 4.02%. The equivalent two-year German yield,

sensitive to European Central Bank interest rate expectations,

fell 4 basis points to a two-week low of 2.57%.

The drop in yields and general improvement in risk pulled

the U.S. dollar broadly lower, with the euro rising 0.4% to

$1.1614, while sterling rose 0.3% to $1.3429.

The dollar fared slightly better on the yen at 160.00

, which is stuck in a bear trend even though the Bank

of Japan is expected to raise rates by 25 basis points to 1% on

Tuesday.

The Bank of England is expected to hold rates at 3.75% on

Thursday and through 2026, with policymakers seen in no rush to

tighten. The BoE's vote split and monetary policy report will be

of interest.

Top-tier British data includes May inflation and retail

sales, and April employment. Thursday's Makerfield election will

also be watched, as a win for Labour Mayor Andy Burnham could

set up a leadership contest with Prime Minister Keir Starmer.

In commodity markets, the drop in yields helped

non-interest-paying gold climb 3% to $4,322 an ounce,

while in the cryptomarkets bitcoin was 4% higher, at $65,515.