European stock markets extended gains and oil prices fell further on Tuesday, buoyed by the U.S.-Iran peace deal and the expected reopening of shipping through the Strait of Hormuz.
London, Paris and Frankfurt stock markets all climbed around 0.5 percent in midday deals, after a mixed session in Asia.
"Although the deal has not been formally signed, there already appears to be a peace dividend for markets," said Kathleen Brooks, research director at trading group XTB.
"We are seeing European markets play catch-up with the U.S., and this could continue, as some European indices remain below their pre-war levels," including London's FTSE 100 index, she added.
U.S. President Donald Trump said ships were moving through the Strait of Hormuz and the key route would be "completely open" by Friday, while Iranian media reported that three oil tankers and two cargo ships had already passed through.
Tehran blockaded the strait after the U.S. and Israel launched their war against Iran on Feb. 28, prompting Washington to halt shipping to and from Iranian ports.
On June 16, oil prices fell to a three-month low on optimism over the expected reopening of the Strait of Hormuz.
Brent North Sea crude, the international benchmark, dropped 3.8 percent to $79.99 a barrel, dipping under $80 for the first time since early March.
The main U.S. oil contract, West Texas Intermediate, slid 3.9 percent to $77.61 a barrel.
But analysts warned that market conditions could remain tight for weeks or months.
U.S. Energy Department data meanwhile showed that strategic oil stockpiles sank last week to their lowest level since 1983 — indicating sustained demand to rebuild them even if the Mideast conflict ends.
"Oil prices, for now, are hovering at the lowest level in two months... but it's still trading at a premium compared to pre-conflict levels, demonstrating the ongoing uncertainties about supplies," said Susannah Streeter, chief investment strategist at Wealth Club.
Focus this week is also on a wave of central bank decisions.
The Federal Reserve on Wednesday is set to leave interest rates unchanged, despite inflation at a three-year high. The Bank of England is also expected to stand pat.
The yen was little changed after the Bank of Japan on Tuesday raised interest rates to their highest level since 1995.
In Asian stocks trading, Seoul led gains, surging two percent thanks to continued strength in the technology sector.
Tech stocks received a boost from another blockbuster performance by Elon Musk's SpaceX, which jumped almost 20 percent for a second session in a row after listing at the end of last week.
Tokyo's Nikkei 225 index also advanced, briefly topping 70,000 points for the first time, while Hong Kong and Shanghai fell.
