Oil tumbled 3%, global shares surged and the dollar dropped on Tuesday as U.S. President Donald Trump announced a ceasefire between Israel and Iran, a dramatic turnaround after the U.S. bombed Iran's nuclear sites over the weekend.

Brent futures had already slid 7% on Monday and U.S. shares jumped after Iran made a token retaliation against a U.S. base and signalled it was done for now.

With the immediate threat to the vital Strait of Hormuz shipping lane seemingly over, the global benchmark touched its lowest since June 11 and was last at $69.11 a barrel, U.S. crude futures dropped 3.2% to $66.32 a barrel.

"Investors mostly shrugged at what appeared on the surface a seismic geopolitical event over the weekend and those who kept their nerve and held off from de-risking have so far been proven right," said Kenneth Broux, head of corporate research FX and rates at Societe Generale.

Israeli Defence Minister Israel Katz saying he had ordered the military to strike Tehran in response to what he said were Iranian missiles fired in a violation of the ceasefire, did little to disrupt the mood. Iran said it had not violated the ceasefire.

Risk assets rallied, with S&P 500 futures up 0.9% and Nasdaq futures 1.1% higher. Europe's Stoxx 600 gained 1.4%, with travel stocks including airlines surging 3.5% , while oil and gas names shed 2%.

Earlier in the day, MSCI's broadest index of Asia-Pacific shares outside Japan jumped 2.2%, while Japan's Nikkei rallied 1.1%.

But the positive news did not spill over into the bond market where the focus instead was on Germany's draft budget, which includes record investment, requiring higher borrowing.

The impact was particularly felt on longer dated bonds. Germany's 30-year yield rose 8 basis points to 3.065% and its 10-year yield rose 5 bps to 2.60%.

Those moves rippled across markets, with the U.S. 10-year yield up 2 bps at 4.34% and Britain's 10-year yield up 2 bps to 4.51% , though increasing bets on U.S. rate cuts this year kept U.S. bonds in check.

RATE CUTS APPROACHING?

Investors are also keeping a close eye on remarks from Federal Reserve policymakers, who in aggregate have been nervous about giving any signs that rate cuts are imminent.

However, Vice Chair for Supervision Michelle Bowman said on Monday the time to cut interest rates was getting nearer as risks to the job market may be on the rise.

That followed Fed Governor Christopher Waller saying on Friday he would consider a rate cut at the July 29-30 meeting.

Fed Chair Jerome Powell will appear before Congress later on Tuesday and, so far, has been more cautious about a near-term easing.

Markets still only imply around a 22% chance the Fed will cut at its next meeting on July 30, but a September cut is near-to-fully priced.

News of the ceasefire saw the dollar extend an overnight retreat and slip 0.77% to 145.0 yen, having come off a six-week high of 148 yen overnight.

The euro rose 0.2% to $1.1602 on Tuesday, having gained 0.5% overnight.

The yen and euro benefited from the slide in oil prices as both the EU and Japan rely heavily on imports of oil and liquefied natural gas, while the U.S. is a net exporter.

The risk-on mood saw gold prices ease 1.3% to $3,323 an ounce.

(Reporting by Wayne Cole and Stella Qiu, Ankur Banerjee in Singapore, and Alun John in London. Editing by Bernadette Baum and Mark Potter)