After 13 days of attacks on sites in the Islamic republic, the United States held fire over the weekend and Donald Trump's UN envoy said the US president was "giving talks some space".

Tehran in turn said it would stop its retaliatory attacks on regional neighbors, handing Gulf shipping and the oil industry a respite.

The two resumed hostilities this month, breaking a fragile truce, after Iran attacked ships passing through Omani waters in the Strait of Hormuz, sparking a pattern of escalation.

That derailed diplomatic efforts between Washington and Tehran, but the conflict then expanded beyond the vital energy corridor, and saw Iran-backed Houthi rebels in Yemen strike Saudi vessels in the Bab al-Mandeb Strait, a crucial passage into the Red Sea.

Crude prices soared on the flare-up, with Brent breaking back above US$100 a barrel last week for the first time since May. News that shipping continued in the Red Sea helped investors pare the gains Friday.

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However, Trump's decision to hold off more strikes and Iran's claims Sunday that it had made progress in talks with Oman on management of the Strait of Hormuz provided some much-needed relief.

The discussions focused on "common principles and operational mechanisms" for ensuring the safe passage of shipping through the strait while respecting the sovereign rights of the two states, Iran's foreign ministry spokesman Esmaeil Baqaei said.

Meanwhile, a report said Pakistan was looking at resuming US-Iran peace talks, following a push initiated by China.

Both main oil contracts sank Monday, with Brent shedding more than seven percent at one point to briefly drop back below $90.

"It looks as if developments in the Middle East have moved in a positive direction over the weekend, adding some credibility to the notion that oil above $100 a barrel seems to induce de-escalatory behavior from both sides," wrote National Australia Bank's Sally Auld.

The positive developments eased worries about a reignition of inflation and a fresh round of interest rate hikes, in turn helping most equity markets higher.

However, concerns about the sustainability of the AI boom and questions over the eye-watering sums pumped into the sector continue to dog traders, as tech firms bear the brunt of selling.

Seoul again led the losses, shedding more than one percent with chip giants SK hynix and Samsung in the firing line once more.

Taipei and Singapore fell, with Jakarta also in retreat following the surprise resignation of Indonesian central bank boss Perry Warjiyo citing personal reasons.

Tokyo rose, though tech firms Advantest, Kioxia and Tokyo Electron suffered more hefty selling pressure.

Hong Kong, Sydney, Shanghai, Wellington and Manila were also up.

Traders will be keenly awaiting the release of earnings from SK hynix, Samsung and Japan's Kioxia report this week, while US titans Microsoft, Meta, Apple and Amazon are also due, with focus on their outlooks and spending plans.

Tim Waterer, of KCM Trade, said: "Traders remain somewhat nervy about the scale of the capex being committed, given lingering concerns over how long the return-on-investment phase may take to fully materialize."

Also in view this week is the Federal Reserve's latest policy decision in light of the latest US-Iran flare-up and recent data indicating inflation easing.

Bets on a hike have risen over the past week, though analysts expect officials to stand pat on Wednesday.

However, Jenny Zeng at Allianz Global Investors warned: "While the (policy board) is likely to remain on hold in July, we continue to expect 50 basis points of tightening by year-end."

In company news, China's leading memory chipmaker CXMT jumped 470 percent on its market debut in Shanghai, briefly surpassing megabank ICBC as the mainland's most valuable company.

The breathtaking surge came after the Anhui-based company had raised $9.8 billion in a blockbuster initial public offering, Bloomberg News reported, making it China's biggest ever mainland tech share sale.

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