(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.