Stocks rise, oil falls as Middle East fears ease, central banks in focus

US stock indexes climbed and oil fell from last week's highs on Monday after conflict between Israel and Iran left crude production and exports unaffected, while investors stayed braced for a week packed with central bank meetings.

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Geopolitics loomed large as Group of Seven leaders began annual talks in Canada.

Markets took comfort after a torrid session on Friday saw oil surge 7% and Wall Street indexes lose more than 1%.

At 10:48 a.m. the Dow Jones Industrial Average was 1.17% higher, the S&P 500 gained 1.168 and the Nasdaq Composite was also up 1.51%.

US crude fell 3.44% to $70.47 a barrel and Brent fell to $71.63 per barrel, down 3.5% on the day.

"Markets came to the conclusion that for now, the Israeli/Iranian conflict is localized," Andy Brenner, Head of International Fixed Income at National Alliance Securities, said in a note to clients.

Any sustained inflationary impact from the oil price outlook could make the Federal Reserve more nervous about giving too many hints at its Wednesday meeting about interest rate cuts later in the year.

Investors still expect two cuts by December, with a first move in September seen as most likely.

"The key is how much flexibility the Fed thinks it has. We've been pleasantly surprised we've not yet seen inflationary pass-through from the tariffs," said Ben Laidler, head of equity strategy at Bradesco BBI.