World share prices have soared after a tentative deal was announced on ending the Iran war and reopening the Strait of Hormuz, while oil prices fell more than $US4 a barrel.
In early European trading, Germany's DAX advanced 1.7 per cent to 25,066.48, while the CAC 40 in Paris also added 1.7 per cent to 8,410.36.
Britain's FTSE 100 gained 0.8 per cent to 10,553.18.
After repeated false starts, investors were betting that this time, the war might end. US President Donald Trump confirmed the initial agreement and authorised an end to the US naval blockade of Iranian ports.
Iran confirmed it but signalled that implementation would not start until a signing is held in Switzerland on Friday. Broader negotiations on issues like Iran's nuclear program are expected to continue over the next 60 days.
In early trading on Monday, the price of Brent crude oil, the international standard, fell $US4.08 to $US83.25 per barrel, well off its May peak of $US126.41 but still above the $US67 where it traded before the war began in late February.
US benchmark crude lost $US4.51 to $US80.37 per barrel.
It may take months for oil prices to stabilise after the disruptions from the war caused them to surge, pushing costs up for petrol and many other products.
Energy experts said shipping and insurance companies will want to be confident the pact will hold, ensuring that oil and gas supplies will flow freely enough for the world's needs to be met.
"The reopening of Hormuz is a relief valve, not a full peace dividend. The market can remove some crude panic, but it still has to price the gap between a headline, a signature, and a regime that actually complies," Stephen Innes of SPI Asset Management said in a report.
Still, the news was a huge relief for markets that have been roiled since the conflict began in late February.
Stocks rallied in Asia, where Tokyo's Nikkei gained five per cent to 69,317.50 as the benchmark logged another record high.
Buying was heaviest for technology shares, especially those related to artificial intelligence. The boom in AI has been driving gains in Japan, where the benchmark has gained more than 80 per cent in the last year.
"This is great news," said Takashi Hiroki, chief strategist at Monex. "Buying by foreign investors is leading the market with expectations of easing tensions around the situation in the Middle East. Then the decline in New York crude oil futures is supporting this positive market."
The Kospi in Seoul surged 5.2 per cent, Hong Kong's Hang Seng gained 0.6 per cent, while the Shanghai Composite index rose 1.6 per cent.
Australia's S&P/ASX 200 advanced 1.3 per cent, Taiwan's Taiex lifted 2.8 per cent and the Sensex in India rose 1.2 per cent.
On Friday, US stocks advanced as Musk's SpaceX soared in its highly anticipated debut on Wall Street.
The strong start suggested plenty of demand still exists among investors for AI after SpaceX stock leaped 19.2 per cent in its first day of trading. That gave Elon Musk's rocket company a total value of $US2.1 trillion, making it bigger than Exxon Mobil, Bank of America and Coca-Cola combined.
The S&P 500 added 0.5 per cent to close out its 10th winning week in the last 11. The Dow industrials climbed 353 points, or 0.7 per cent, and the Nasdaq composite gained 0.3 per cent.
This week will bring interest rate decisions from the Federal Reserve and Bank of England, on Thursday. On Tuesday, the Bank of Japan is due to announce its monetary policy updates. It is widely expected to raise its benchmark interest rate to one per cent from the current 0.75 per cent.
That would be the highest rate in more than 30 years.
In other dealings early Monday, the US dollar slipped to 160.17 Japanese yen from 160.12 yen late Friday. The euro climbed to $US1.1608 from $US1.1578.
with AP
