* US crude up 1.9% to $70.52 a barrel

* Yen hits 40-year low against USD; gold heads for steepest

quarterly drop since 2013

* Tech shares rebound on Wall Street after last week's

selloff

(Updates prices throughout, updates comments)

By Harry Robertson and Rodrigo Campos

LONDON/NEW YORK, June 29 (Reuters) - A global gauge of stock

markets rose on Monday as investors tracked the implementation

of an interim peace deal between Iran and the U.S., even as oil

prices rose after tit-for-tat attacks underscored the risk of

escalation.

European equities ended flat but Wall Street led gains with

technology shares rebounding after last week's selloff driven by

concerns over AI spending.

A return to diplomacy in the Middle East would follow several

days of strikes since an Iranian projectile hit a cargo vessel

in the Strait of Hormuz last week, with both sides accusing each

other of breaking an interim ceasefire.

Both Brent and WTI oil were up on the day but still sharply

lower for the month. Recent U.S. and Iranian attacks highlighted

the fragility of the interim deal, while expectations of a

recovery in energy shipments through the Strait of Hormuz

injected volatility into markets.

"I think that reality is starting to sink in, not every

barrel is going to come out the Gulf in the next week or two,

you can't really jam as many barrels through there as possible

to pre-war levels. As long as the situation is risky, anyone

owning a boat runs the risk of having that boat attacked as it

heads through the strait," said Bob Yawger, director of energy

futures ⁠at Mizuho.

U.S. crude rose 1.86% to $70.52 a barrel and Brent

rose to $72.85 per barrel, up 1.19% on the day.

The Dow Jones Industrial Average rose 362.86 points, or

0.70%, to 52,238.97, the S&P 500 rose 81.02 points, or

1.10%, to 7,435.04 and the Nasdaq Composite rose 484.31

points, or 1.91%, to 25,781.93. MSCI's gauge of stocks across

the globe rose 9.27 points, or 0.84%,

to 1,111.87.

"The scattered conflict with Iran continues, seemingly following

the established pattern of heightened tensions into the weekend

before those are resolved ahead of Monday's market open,"

William Blair's macro analyst Richard de Chazal said.

The pan-European STOXX 600 index was flat while

Europe's broad FTSEurofirst 300 index rose 1.87 points,

or 0.07%.

Emerging market stocks rose 3.06 points, or 0.18%,

to 1,709.46 while Japan's Nikkei rose 107.23 points, or

0.15%, to 69,468.11.

RATE HIKE WAGERS

Oil prices have fallen sharply in recent weeks but measures of

inflation have nonetheless jumped in the U.S. and rising

expectations of a Federal Reserve rate hike have lifted the

dollar. The dollar index, which measures the U.S.

currency against peers, was last slightly lower at 101.25, just

below the 13-month high it touched last week.

"There's still plenty of risk facing the oil market. Even

so, participants appear to be ... focusing on what a continued

recovery in oil flows would mean for the global balance," ING

analysts said in a note on Monday.

The main focus for the U.S. economy this week will be Thursday's

jobs report for June. Three consecutive months of

stronger-than-expected payrolls have reinforced the Fed's

hawkish shift, though any cooling in the labor market could

prompt a more dovish reassessment.

Investors are pricing in at least one Fed hike this year, a

sharp reversal from expectations of two rate cuts before the

Iran war.

"The labor market appears to have accelerated," said Marc

Chandler, chief market strategist at Bannockburn Global Forex.

"The concerns that the doves had pointed to about labor markets

slowing down seem to have passed."

The Japanese yen hit 161.97 per dollar, its weakest since 1986.

"The Bank of Japan's long-awaited 25 (basis point) rate hike

to 1.00% has done little to offset the still-wide interest rate

differential with the United States, especially after the

Federal Reserve maintained a hawkish stance and signaled rates

are likely to remain elevated for longer," analysts at LMAX

Group said in a report.

The rising dollar has weighed on gold, which was down

1.9% to $4,010.32 an ounce. The yellow metal is set for a 13%

decline in the second quarter, its biggest quarterly drop since

2013.