(Updates for European session)
* S&P 500 and EU stocks 0.1% lower, oil prices fall
* Brent eases as Iran says progress made in peace talks
* Sterling soft on reports UK PM Starmer may resign
By Wayne Cole and Harry Robertson
SYDNEY/LONDON, June 22 (Reuters) - European stocks and U.S.
futures fell slightly while oil prices dipped on Monday after
Iranian negotiators said progress had been made in peace talks
with the United States, helping calm fears the fragile process
to end the Iran war 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.
The talks had earlier been overshadowed by Tehran's announcement
it had again closed the Strait of Hormuz, with shipping having
slowed after U.S. Central Command said 55 vessels passed on
Saturday, prompting U.S. President Donald Trumpto threaten fresh
attacks.
The apparent progress in discussions saw Brent crude
futures shed early gains to ease 0.7% to $80.07 a barrel, far
below its May peak of $126.41.
Europe's STOXX 600 index wavered and was last down
0.1%, while U.S. S&P 500 futures pared early losses to
also trade 0.1% lower.
"There does appear to be further progress being made during
talks in Switzerland towards a lasting settlement, and oil
prices have dipped again," said Susannah Streeter, chief
investment strategist at Wealth Club.
"It is clear there is still a long way to go, and more
obstacles may emerge before a long-term deal is signed."
Asian stocks climbed overnight, supported by the apparent
progress in peace talks. Japan's Nikkei rose 1.6%, while
South Korea's red-hot market added 0.7%, after surging
more than 11% last week on demand for semiconductor stocks.
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 around 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 4.230%.
"Our baseline call is for patience and a first hike in the
second half of 2027, but (we) 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.
The Fed's hawkish outlook helped push the dollar up 0.3% to
161.77 yen, with only the threat of Japanese
intervention preventing the currency rising to 2024's 40-year
high of 161.96.
Meanwhile, political uncertainty combined with a rising dollar
to push sterling down 0.37% to $1.319.
Reports said 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.
The euro eased 0.3% to $1.144, after hitting a
three-month low on Friday at $1.1418.