Volkswacht Bodensee - Oil prices dip on report of US sanctions relief for Iran during talks

The unconfirmed Tasnim report cited an unnamed source, but analysts said traders seized on the news after US President Donald Trump warned Tehran on Sunday that time was running out to make a deal.

Despite the uncertainty, "this is good first step, if confirmed", said Fawad Razaqzada, an analyst at Forex.com.

The conflict has led to an effective blockade of the Strait of Hormuz, through which around 20 percent of global oil exports pass in peacetime, and sent oil prices soaring.

Stock markets fell earlier in Asia and European indexes had also opened mostly lower before the Tasnim report. Wall Street also opened higher.

The report helped dispel worries that building inflation pressures would weigh on economic growth and dent the AI-fuelled tech rally that sent US stocks in particular to record highs last week.

Traders also have their eye on a meeting of Group of Seven finance ministers and central bank chiefs that kicks off in Paris, with bond selloffs in the spotlight, analysts said.

Rising yields make borrowing more expensive, potentially putting a brake on investments like the billions being poured into the AI rollout.

All eyes are on quarterly results from US chip titan Nvidia, set for Wednesday, which will be scrutinised as investors question whether huge spending on AI data centres is justified by potential returns.

Government bond yields have risen worldwide in recent trading sessions as more investors start to question if inflation will begin eroding economic growth while pressuring deficits.

"Global government yields rose sharply heading into the start of this week, as three forces collided: surging oil prices, fading hopes for a Strait of Hormuz resolution, and mounting fiscal concerns especially in the UK and US," said Michael Wan at MUFG.

In Asia, the Seoul stock market, which has renewed with record highs in recent days thanks to the artificial intelligence spending boom, ended the day 0.3 percent higher.

In Tokyo, shares in memory chip maker Kioxia soared 16 percent following stellar quarterly results on Friday.

Kioxia, the world's third-largest producer of NAND flash memory chips, which are used as storage in AI data centres, has seen its stock surge nearly 300 percent over the past year.

The company has forecast an eye-watering 1.3 trillion yen ($8.2 billion) in operating profit for April-June, saying it is "riding the large wave of AI demand, which has led to record high revenue and profits".

- Key figures at around 1345 GMT -

Brent North Sea Crude: DOWN 1.0 percent at $108.12 a barrel

West Texas Intermediate: DOWN 1.2 percent at $99.86 a barrel

New York - DOW: UP 0.2 percent at 49,643.16 points

New York - S&P 500: UP 0.1 percent at 7,411.91

New York - Nasdaq: UP 0.1 percent at 26,260.91

London - FTSE 100: UP 1.2 percent at 10,317.75 points

Paris - CAC 40: UP 0.6 percent at 8,001.41

Frankfurt - DAX 30: UP 1.8 percent at 24,379.14

Tokyo - Nikkei 225: DOWN 1.0 percent at 60,815.95 (close)

Hong Kong - Hang Seng Index: DOWN 1.1 percent at 25,675.18 (close)

Shanghai - Composite: DOWN 0.1 percent at 4,131.53 (close)

Euro/dollar: UP at $1.1655 from $1.1620 on Friday

Pound/dollar: UP at $1.3394 from $1.3316

Euro/pound: DOWN at 86.99 pence from 87.25 pence

Dollar/yen: DOWN at 158.70 yen from 158.78 yen

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R.Flueckiger--VB