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Oil dips after WSJ report Iran seeks talks with Israel

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U.S. stock indexes follow global counterparts higher

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Busy central bank week ahead, eyes on Middle East

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China retail data beat forecasts, factory output in line

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Asia, European shares nudge up

(Updates asset prices at 10:48 ET)

By Isla Binnie and Alun John

NEW YORK/LONDON, June 16 (Reuters) -

U.S. stock indexes climbed and oil fell from last week's

highs on Monday after conflict between Israel and Iran left

crude production and exports unaffected, while investors stayed

braced for a week packed with central bank meetings.

Geopolitics loomed large as Group of Seven leaders began

annual talks in Canada. Iranian strikes on Israel and a promise

of retaliation were followed by a Wall Street Journal report

that Tehran was seeking an end to hostilities, against a

backdrop of existing international strains prompted in part by

Donald Trump's tariff policy.

Markets took comfort after a torrid session on Friday saw

oil surge 7% and Wall Street indexes lose more than 1%.

At 10:48 a.m. the Dow Jones Industrial Average

was 1.17% higher, the S&P 500 gained 1.16% and the Nasdaq

Composite was also up 1.51%.

U.S. crude fell 3.44% to $70.47 a barrel and Brent

fell to $71.63 per barrel, down 3.5% on the day.

"Markets came to the conclusion that for now, the

Israeli/Iranian conflict is localized," Andy Brenner, Head of

International Fixed Income at National Alliance Securities, said

in a note to clients.

Any sustained inflationary impact from the oil price outlook

could make the Federal Reserve more nervous about giving too

many hints at its Wednesday meeting about interest rate cuts

later in the year.

Investors still expect two cuts by December, with a first

move in September seen as most likely.

"The key is how much flexibility the Fed thinks it has.

We've been pleasantly surprised we've not yet seen inflationary

pass-through from the tariffs," said Ben Laidler, head of equity

strategy at Bradesco BBI.

U.S. Treasury yields fell after the report of Iran's

outreach to Israel, with the 10-year notes yielding

0.9 basis points to 4.415%, from 4.424% late on Friday.

MSCI's gauge of stocks across the globe

marched 1.09% higher after the U.S. open.

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.

MORE DATA, MEETINGS COMING

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.

German government bond yields fell on Monday, with the

benchmark 10-year Bunds yielding 2.52%, from 2.536%

late on Friday.

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

bid reverse and it was down 1.04% to $3,396.59 an ounce..