Global shares gain as oil retreats from six-month high

Europe's STOXX 600 index was 0.05% higher, DAX was 0.38% higher, FTSE 100 was down 0.19%, S&P 500 futures were down 0.2%

Global shares gained on Monday as oil prices pulled back from a six-month high, while U.S. bond yields reached their highest level since late November as investors continued to rein in bets on Fed rate cuts.

Europe's STOXX 600 index was 0.05% higher in early trading after dropping 1.2% the earlier week, while Germany's DAX was 0.38% higher but Britain's FTSE 100 was down 0.19%.

U.S. S&P 500 futures were down 0.2% after the index dropped 0.9% last week and Nasdaq futures were off by a similar amount.

Stock markets have made a rocky start to the second quarter as the risk of a wider conflict in the Middle East pushed up oil prices. Strong U.S. economic data has also added to investor worries about how much central banks will be able to lower borrowing costs.

Oil prices dropped on Monday, however, as geopolitical tensions eased somewhat.

Brent crude was down 1.1% at $90.20 a barrel, after reaching a six-month high of $91.91 last week.

The price remains higher overall though and together with tighter supply globally, there isn’t an immediate catalyst for the price to loosen, according to Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

A much stronger-than-expected U.S. jobs report on Friday, which followed strong manufacturing data at the start of the week, caused investors to pare their bets on a June rate cut from the Federal Reserve.

Market pricing on Monday showed traders see a nearly 48% probability of a cut in June, down from nearly 59% a week back.

The possibility of rates staying higher for longer pushed 10-year U.S. Treasury yields to their highest since late November on Monday at 4.45%, up 7 bps.

The resilience of the U.S. labour market is calling the June cut into question, said Mohit Kumar, chief Europe economist at Jefferies.

He added: While one should not attach too much importance to one payroll report, if the data remains robust we will have to rethink our June call.

Investor focus this week will be on the U.S. CPI report on Wednesday, which is expected to show core inflation, which strips out volatile energy and food prices, declining to 3.7% in March from 3.8% the previous month.

If inflation data in the next two months show a downward trend, the Fed may still be open to a rate cut in June, according to Vasu Menon, MD of investment strategy at OCBC Bank in Singapore.

The European Central Bank (ECB) sets interest rates on Thursday, with investors looking for a green light from officials that rate cuts will start in June after inflation slowed more than expected to 2.4% in March.