World stocks have held near record highs and are set for their third straight week of gains, while benchmark oil prices are pinned below $US100 a barrel before a crucial weekend that could pave the way for a near-term resolution of the Iran war.
US President Donald Trump expressed confidence that an agreement could soon be reached to end the conflict and urged the Tehran-aligned Hezbollah group to hold its fire as a 10-day truce went into effect between Lebanon and Israel.
Trump said the next meeting between US and Iranian negotiators could take place at the weekend.
Investors have been quick to take an optimistic view of any signs of denouement in April, even though the Strait of Hormuz - through which a fifth of the world's oil and gas supplies typically flow - remains largely closed.
That optimism has kept oil prices below $US100 per barrel, though they remain well above the pre-war levels.
Brent crude futures were down about one per cent on Friday to $US98.5 a barrel.
US West Texas Intermediate crude futures fell 1.2 per cent to $US89.1 a barrel.
In stocks, MSCI's world share index, which tumbled in March due to the war, hit a record high on Thursday and has risen 8.5 per cent so far in April.
"The debate is 'has this gone too far too fast?', and 'what in the world are equities thinking rallying so hard when oil is still at $US100?'" said Ben Laidler, head of macro and equity strategy at Bradesco BBI.
"But that misses the point," Laidler said, "(Investors) are forward-looking. Relative valuations look pretty good, earnings remain very strong, and it's a rare geopolitical event that hasn't been a buying opportunity."
The initial stages of US earnings season have been broadly positive, though on Friday the focus was on Netflix, which slumped 9.6 per cent in pre-market trading after forecasting below-expectation second-quarter earnings per share.
Broader index moves were more muted, with traders reluctant to make big bets ahead of a critical weekend when markets will be closed.
Europe's broad STOXX 600, which has underperformed US and Asian peers, was a whisker higher as were US S&P 500 futures.
Asia stocks dipped earlier in the day, but still posted weekly gains.
Government bond markets have regained some of their lost ground, but much less than stock markets have.
Investors see less chance of a Federal Reserve rate cut in 2026 than they had pre-war and still see the rate hikes from the European Central Bank they rushed to price in in early March.
The US benchmark 10-year Treasury yield was little changed on Friday at 4.31 per cent, down from late March highs close to 4.5 per cent but well above pre-war levels about four per cent.
The euro zone benchmark German 10-year Bund yield was 3.03 per cent, like its US peer, off its recent high but about 40 basis points higher than late February.
The US dollar benefited from safe-haven flows in March, but has since given up those gains.
The euro last bought $US1.1782, just below the seven-week high it touched in the previous session.
The yen was slightly weaker at 159.1 per dollar as investors took stock of comments from Bank of Japan Governor Kazuo Ueda, who steered clear of signalling a rate hike was on the cards in April.
Gold was steady at $US4,789 an ounce.
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