By Chris Prentice and Harry Robertson
NEW YORK/LONDON, Aug 10 (Reuters) - European shares and major Wall Street indexes were lower on Monday, with markets focused on the outlook for Federal Reserve interest rates and on a potential deal between the U.S. and Iran to reopen the Strait of Hormuz.
Oil prices jumped after Iran insisted that the United States must satisfy several demands before the Strait can reopen. [O/R]
On Wall Street, the Dow Jones Industrial Average fell 0.12% to 53,974.62 and the Nasdaq
Composite lost 0.17% to 26,645.08. The S&P 500 bucked the trend, edging 0.02% higher at 7,759.27.
U.S. stocks had hit a record high on Friday after a weaker-than-expected jobs report caused traders to cut their bets on Fed rate hikes.
The pan-European STOXX 600 index fell 0.16% on Monday, and Europe's broad FTSEurofirst 300 index dropped 0.14%.
The MSCI index of global stocks clung to gains, up 0.05%.
Iran said on Sunday that a deal with Oman about transit through the Strait of Hormuz was in its final stages, but reiterated that the waterway would only reopen once the United States met other conditions. Those include compensation and an end to sanctions and military threats.
Brent crude futures rallied 3.06% to $86.11 per barrel, and U.S. crude jumped 3.26% to $80.73. Global benchmark prices still remained well below late April's peak of more than $126 a barrel.
The key event for markets this week is the U.S. inflation reading for July on Wednesday, which will impact Fed officials' thinking on rates. Investors will also be watching euro zone employment data and U.S. consumer price figures for clues on the interest rate outlook.
Economists polled by Reuters expect the consumer price index to have risen 3.4% year-on-year in data on Wednesday, compared with 3.5% the previous month.
"We are keeping our view of no hikes from the Fed for this year," said Mohit Kumar, a senior European economist at Jefferies, noting this week's inflation report is key.
"If oil prices remain contained and move lower from the current levels, that would prevent the need for the Fed to hike rates," Kumar said.
Asian shares rose overnight, with MSCI's broadest index of Asia-Pacific shares outside Japan closing up 0.61% at 1,628.74.
Emerging market stocks rose 0.66% to 1,668.75.
EARNINGS HELP POWER STOCKS
Stock markets around the world have hit record highs in recent weeks, boosted by strong corporate earnings.
Analysts at BofA said that with nearly 90% of S&P 500 results in, earnings per share were up 30% on the year after excluding investment gains at Alphabet and Amazon. A 76% EPS beat rate matched the strongest level since 2021.
Strategists at JPMorgan revised up their 2026 EPS estimate to $365, marking annual growth of 35%, and lifted their S&P 500 price target to 8,000 from 7,800. It is currently at 7,758.
Earnings are lighter this week, but include semiconductor company Applied Materials, networking equipment maker Cisco and cloud infrastructure technology company CoreWeave.
BONDS AND CURRENCIES
The yield on benchmark U.S. 10-year notes rose 3.03 basis points to 4.688%, with the market bracing for $125 billion in new issuance this week.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.15% to 99.79, with the euro down 0.11% at $1.1545.
The Japanese yen weakened 0.75% to 158.97 per dollar, though investors were still wary of intervention.
Bank of Japan policymakers warned of mounting inflation risks that could require a faster-than-expected pace of interest rate increases, a summary of opinions at their July meeting showed, boosting the case for a September hike.
(Reporting by Chris Prentice in New York, Harry Robertson in London and Wayne Cole in Sydney; Editing by Sharon Singleton, Jan Harvey and Andrew Heavens)
