Portugal Colonial - Oil prices drop, stocks climb as Iran-Israel war fears ease

The dollar dipped against the euro and pound, while safe-haven gold declined slightly.

"As things stand, investors seem less fearful than they were going into the weekend of the possibility that the war between Israel and Iran spreads across the Middle East, and beyond," said David Morrison, senior market analyst at financial services provider Trade Nation.

"It appears that most of the Israeli airstrikes and missile launches avoided the most significant parts of Iran’s energy infrastructure. And so far Iran's retaliation has done relatively little damage," he added.

Wall Street's main stock indices pushed higher, with the tech-heavy Nasdaq up around 1.5 percent in late morning deals.

In Europe, London, Paris and Frankfurt all closed the day with gains.

They tracked gains in Asia, where Tokyo closed up 1.3 percent, boosted by a weaker yen, while Hong Kong and Shanghai also advanced.

Israel's surprise strike against Iranian military and nuclear sites on Friday -- killing top commanders and scientists -- sent crude prices soaring as much as 13 percent at one point on fears about supplies from the region.

However, concerns over the conflict spreading appeared to have receded, with both main oil contracts retreating 3.7 percent on Monday.

"Unpleasant as it is to watch two sides trade missiles on a sustained basis, so long as the Straits of Hormuz remain quiescent it is hard to envisage a scenario where Friday’s gains can be sustained," said Chris Beauchamp, chief market analyst at online trading platform IG.

Analysts said the recent decision by the OPEC+ group of crude producing nations, led by Saudi Arabia and Russia, to raise output again in July also played a role.

"There may need to be a major escalation in the conflict before we get another sharp upswing in oil and gold prices," said Kathleen Brooks, research director at trading group XTB.

Investors were gearing up for monetary policy decisions this week from the US Federal Reserve, Bank of England and Bank of Japan.

All are expected to stand pat but traders will be keeping a close watch on their statements for clues on interest-rate outlooks, with US officials under pressure from President Donald Trump to cut borrowing costs.

Also in focus is the G7 summit in the Canadian Rockies, which kicked off Sunday, where the Middle East crisis will be discussed along with trade after Trump's tariff blitz.

In corporate news, shares in Nippon Steel rose more than three percent in Tokyo after Trump on Friday signed an executive order approving its $14.9 billion merger with US Steel, bringing an end to the long-running saga.

Shares in Gucci owner Kering climbed almost 12 percent in Paris on reports that the outgoing boss of French automaker Renault would take over as chief executive of the struggling luxury group.

Kering announced the appointment after European markets closed.

Renault shares slumped 8.7 percent, following its announcement on Sunday that Luca de Meo would step down in July.

- Key figures at around 1530 GMT -

West Texas Intermediate: DOWN 3.7 percent at $70.28 per barrel

Brent North Sea Crude: DOWN 3.7 percent at $71.50 per barrel

New York - Dow: UP 0.9 percent at 42,585.55 points

New York - S&P 500: UP 1.1 percent at 6,040.49

New York - Nasdaq: UP 1.5 percent at 19,705.83

London - FTSE 100: UP 0.3 percent at 8,875.22 (close)

Paris - CAC 40: UP 0.8 percent at 7,742.24 (close)

Frankfurt - DAX: UP 0.8 percent at 23,699.12 (close)

Tokyo - Nikkei 225: UP 1.3 percent at 38,311.33 (close)

Hong Kong - Hang Seng Index: UP 0.7 percent at 24,060.99 (close)

Shanghai - Composite: UP 0.4 percent at 3,388.73 (close)

Euro/dollar: UP at $1.1590 from $1.1540 on Friday

Pound/dollar: UP at $1.3598 from $1.3560

Dollar/yen: UP at 144.10 yen from 144.04 yen

Euro/pound: UP at 85.23 pence from 85.11 pence

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C.Amaral--PC