* 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.