Volkswacht Bodensee - Oil drops below $100 on hopes of US-Iran deal to open Hormuz

Both North Sea Brent, the international benchmark, and West Texas Intermediate crude futures contracts were down more than five percent after headlines over the weekend suggested progress on talks to end the Middle East war.

A deal could be announced "today", US Secretary of State Marco Rubio said Monday during a visit to New Delhi.

His comment came after President Donald Trump said negotiations were being conducted in an "orderly and constructive manner", even while cautioning that US negotiators had been advised "not to rush into a deal".

But many investors are betting Trump is eager to declare an accord that would see Gulf tanker traffic resume through the Strait of Hormuz -- and help ease fuel prices ahead of the northern hemisphere's summer tourism season.

Reports that Iran's top negotiator Mohammad Bagher Ghalibaf had arrived in Qatar on Monday as part of the "diplomatic process" also bolstered optimism.

"According to reports from Donald Trump, a memorandum of understanding has been 'largely negotiated', with details to be announced at some stage soon," said Chris Weston, head of research at Pepperstone.

The prospect sent stock markets higher across the board in Asia, with Tokyo jumping 2.9 percent and topping 65,000 points for the first time.

In Europe, Paris and Frankfurt saw strong buying though trading volumes were light due to Whit Monday market closures in several countries on the continent, while London was closed for the Spring Bank holiday.

Wall Street was also closed Monday for Memorial Day.

Later this week, investors will be keeping an eye on how the US Federal Reserve and its new chief Kevin Warsh react to key consumer inflation data and its potential effect on interest rates.

Many economists have warned that sustained price increases from the US and Israeli war against Iran will limit the likelihood of interest rate cuts by the Fed to boost US growth -- something Trump has repeatedly called for in recent months.

"The inflation story remains central to the entire setup," said Stephen Innes at SPI Asset Management.

"After several hotter-than-expected consumer and producer inflation reports earlier this month, markets are increasingly concerned that elevated oil prices and supply disruptions tied to the Middle East conflict are beginning to seep into the broader inflation pipeline," he said.

In Europe, higher inflation is widely expected to lead the European Central Bank to increase rates in the coming weeks, increasing borrowing costs even as economic growth remains subdued.

But lofty corporate earnings and AI-driven tech enthusiasm have encouraged investors to look past the inflation risks, with bellwether US indexes trading at record highs despite the economic fallout from the Mideast war.

- Key figures at around 1540 GMT -

Brent North Sea Crude: DOWN 5.5 percent at $94.73 a barrel

West Texas Intermediate: DOWN 5.9 percent at $90.88 a barrel

Tokyo - Nikkei 225: UP 2.9 percent at 65,158.19 points (close)

Shanghai - Composite: UP 1.0 percent at 4152.57 (close)

Hong Kong - Hang Seng Index: Closed for a holiday

London - FTSE 100: Closed for a holiday

Paris - CAC 40: UP 1.8 percent at 8,258.26 (close)

Frankfurt - DAX 30: UP 2.0 percent at 25,389.10 (close)

New York - DOW: Closed for a holiday

Euro/dollar: UP at 1.1646 from 1.1608 on Friday

Pound/dollar: UP at $1.3502 from $1.3441

Dollar/yen: DOWN at 158.90 from 159.13 yen

Euro/pound: DOWN at 86.25 from 86.36 pence

K.Sutter--VB