By Isla Binnie

NEW YORK (Reuters) – Stock indexes closed higher after last week’s losses, and a barrel of oil got $1 cheaper on Monday. Investors took heart from reports that Iran was seeking to end hostilities with Israel and remained confident in their predictions for a busy week of central bank meetings.

Oil prices fell after the Wall Street Journal reported that Iran was seeking a truce following an attack by Israel on Friday, which raised fears of a wider conflict, causing oil prices to soar and weighing on stocks.

Sources told Reuters that Iran has asked regional allies to press U.S. President Donald Trump to influence Israel to agree to a ceasefire.

Geopolitics still loomed, with early cracks threatening to emerge among Group of Seven leaders meeting in Canada. Officials provided conflicting statements regarding whether Trump would sign a draft statement calling for de-escalation of the Israel-Iran conflict.

> “In terms of an escalation, where the U.S. is going to get involved or where it’s really going to be all-out war, where nothing is sacred anymore, I don’t think that’s going to happen,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

> “It’s probably a short-lived situation, so I think the market is rallying on that.”

Following a tumultuous session on Friday, Brent crude futures settled at $73.23 per barrel, down $1 or 1.35%.

The Dow Jones Industrial Average ended 0.75% higher, the S&P 500 was up 0.94%, and the Nasdaq Composite gained 1.52%.

MSCI’s gauge of stocks across the globe marched 1.09% higher after the U.S. open and remained strong throughout the day, quoted up 0.88% after the U.S. close.

Earlier in the trading day, Europe’s STOXX 600 was boosted by a rebound in travel stocks, and Gulf stocks also showed recovery. (EU)

Chinese blue chips gained after data indicated rising retail sales and industrial output aligned with expectations.

FED MEETING IN FOCUS, MORE DATA TO COME

A prolonged rise in oil prices could contribute to inflation; however, recent movements are unlikely to significantly influence discussions when the Federal Reserve meets on Wednesday, noted Emily Roland, co-chief investment strategist at Manulife John Hancock Investments.

> “The Fed is data-dependent, and it takes time for the impact of oil prices (higher or lower) to feed into the inflation numbers,” Roland stated.

> “In our view, the Fed likely keeps the markets waiting with no change to the view of between two to three rate cuts of 0.25% by the end of the year. The bond market is still pricing in two cuts over the year; we will see if this week changes things.”

U.S. retail sales data is due on Tuesday and may show a pullback in autos, potentially dragging the headline number down even as core sales edge higher. A market holiday on Thursday means weekly jobless claims figures will be released on Wednesday.

U.S. Treasury yields initially fell on the reports of Iran’s outreach to Israel but rose again ahead of the data release. The 10-year notes were last seen yielding 4.456%, an increase from 4.424% late on Friday.

Central banks in Norway and Sweden also have meetings this week, with expectations that the latter will trim rates.

The Swiss National Bank meets on Thursday, with a strong consideration to cut by at least a quarter point to take rates to zero, with some speculation it may go negative due to the strength of the Swiss franc.

The Bank of Japan will hold a policy meeting on Tuesday and is widely expected to maintain rates at 0.5%, while leaving the possibility of tightening open later in the year. Speculation also surrounds a potential slowdown in the rundown of its government bond holdings starting next fiscal year.

The calmer mood across markets saw some of gold’s safe-haven bid reverse, with gold down 1.38% to $3,384.97 an ounce.