* S&P 500 and EU stocks pare losses, Nikkei bounces

* Brent eases as Iran says progress made in peace talks

* Treasury yields up, Fed futures wager on September hike

* Sterling soft on reports UK PM Starmer may resign

(Recasts with news on Swiss talks)

By Wayne Cole

SYDNEY, June 22 (Reuters) - Asian share markets swung higher

on Monday as Iranian negotiators said progress had been made in

peace talks with the United States, helping calm fears the

process was breaking down.

Officials from Qatar and Pakistan also released a statement

saying the first session of talks had concluded and progress was

made on a roadmap to reach a final deal in 60 days.

Earlier, U.S. President Donald Trump had threatened fresh

attacks on Iran as Vice President JD Vance met Iranian officials

for the first talks under an interim peace deal.

The talks had been overshadowed by Tehran's announcement it

had again closed the Strait of Hormuz, with tracking sites

showing fewer vessels transiting after 32 ships made the passage

on Friday and 26 on Saturday.

The news saw Brent crude futures shed early gains to

ease 0.4% to $80.17 a barrel, far away from its May peak of

$126.41. U.S. crude remained 1.2% firmer at $77.52 a

barrel.

Japan's Nikkei rose 1.9%, having climbed almost 8%

last week to all-time highs. South Korea's red-hot market added

another 2.6%, after surging more than 11% last week on

demand for semiconductor stocks.

MSCI's broadest index of Asia-Pacific shares outside Japan

gained 1.0%, while Chinese blue chips

were flat.

S&P 500 futures pared early losses to be off 0.2%,

while Nasdaq futures lost 0.3%. In Europe, EUROSTOXX 50

futures edged down 0.1%, while DAX futures were

near flat and FTSE futures added 0.1%.

MARKET NARROWS ODDS ON FED HIKE

Treasuries remained under pressure following a hawkish turn

by the Federal Reserve last week that led markets to price in a

75% chance of a rate hike as early as September.

Futures imply 38 basis points of tightening by year-end,

while yields on 2-year notes rose as much as 4

basis points to the highest since early 2025 at 4.2276%.

"Our baseline call is for patience and a first hike in the

second half of 2027, but believe the margin for error and the

tolerance for further inflation is limited, with genuine risks

of earlier hikes," said Fabio Bassi, head of cross-asset

strategy at JPMorgan.

"We remain constructive on risk assets as improving labour

markets will keep rates higher for longer, supporting a narrow

leadership in Quality Growth, Large Cap and Tech," he added. "We

see upside risks for the S&P target tilted towards 8,000."

The Fed's favoured gauge of core inflation is due on

Thursday and is forecast to rise a tick to 3.4% in May,

underlining the risk of tighter policy.

Central bank speakers include Governor Christopher Waller

and Federal Reserve Bank of New York President John Williams.

The Fed's hawkish outlook kept the dollar supported at

161.48 yen, with only the threat of Japanese

intervention preventing a test of resistance at 161.96, a top

from mid-2024.

The euro eased to $1.1464, after hitting a

three-month low on Friday at $1.1418. Political uncertainty

nudged sterling down 0.2% to $1.3210.

Reports claimed Prime Minister Keir Starmer was considering

his political future, after rival Andy Burnham's decisive

election victory to parliament prompted more ministers in the

governing Labour Party to call for him to go.

"Amid the uncertainty around a potential challenge against

the UK PM and what that means for the fiscal outlook, the

likelihood is that gilts will remain under selling pressure to

start the week," said Skye Masters, head of market research at

NAB.

In commodity markets, news of the progress in peace talks

helped gold bounce 1.1% to $4,205 an ounce.