Updates to U.S. market open

By Stephen Culp

NEW YORK, May 29 (Reuters) - The S&P 500 followed world shares higher and crude prices retreated on Friday as investors neared the end of a holiday-shortened week with renewed hopes of progress toward a peaceful resolution to the Iran war.

The Dow joined the S&P 500 in positive territory while the tech-heavy Nasdaq was essentially unchanged, and U.S. Treasury yields dipped as markets prepared to turn the page on a week and month marked by a tug-of-war between fears that air strikes could shatter a fragile truce and signs that Washington and Tehran are moving closer to the negotiating table.

The S&P 500 is poised to notch its ninth straight weekly gain, its longest winning streak since the one that ended in December 2023.

All three indexes are set to register monthly advances.

The United States and Iran had agreed to extend their ceasefire and lift shipping restrictions as peace negotiations proceed, sources told Reuters, but U.S. President Donald Trump had yet to approve the deal which, according to Iranian state media, has not yet been finalized.

"Both the U.S. and the Iranians are incented to get this done, because the conflict isn't good for either side," said Michael Monaghan, portfolio manager at Founder ETFs in Dallas.

"Each side was probably trying to put on the last tiny bit of horizontal escalation to get to the best possible outcome ... Hopefully, we're through that and we'll get a deal," he added.

The Dow Jones Industrial Average .DJI rose 218.86 points, or 0.43%, to 50,888.48, the S&P 500 .SPX rose 9.06 points, or 0.12%, to 7,572.73 and the Nasdaq Composite .IXIC fell 2.43 points, or 0.01%, to 26,915.85.

European shares gained ground, and were on track to log monthly gains as a potential deal to extend the ceasefire and reopen the Strait of Hormuz supported investor sentiment.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 4.36 points, or 0.40%, to 1,129.27.

The pan-European STOXX 600 .STOXX index rose 0.25%, while Europe's broad FTSEurofirst 300 index .FTEU3 rose 6.02 points, or 0.24%.

Emerging market stocks .MSCIEF rose 26.16 points, or 1.51%, to 1,750.80.

Brent crude oil prices eased as the market awaited confirmation that the United States and Iran have extended their truce.

U.S. crude CLc1 fell 0.1% to $88.80 a barrel and Brent LCOc1 fell to $92.48 per barrel, down 1.31% on the day.

Treasury yields were headed lower for the fourth straight session, closing out a week in which reported progress in U.S.-Iran peace negotiations fueled market optimism.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 0.6 basis points to 4.451%, from 4.455% late on Thursday. The 30-year bond US30YT=RR yield fell 0.1 basis points to 4.9837% from 4.985% late on Thursday.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.9 basis points to 4.016%, from 4.025% late on Thursday.

The dollar inched higher but remained on course for a small weekly loss amid fluctuating hopes for a near-term resolution to the Middle East conflict.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.05% to 99.04, with the euro EUR= down 0.04% at $1.1645.

Against the Japanese yen JPY=, the dollar strengthened 0.05% to 159.32.

In cryptocurrencies, bitcoin BTC= fell 1.16% to $72,618.43. Ethereum ETH= declined 1.21% to $1,986.70.

Gold got a boost from ceasefire optimism but remained on course for a monthly drop.

Spot gold XAU= rose 1.03% to $4,537.99 an ounce. U.S. gold futures GCc1 rose 0.74% to $4,532.40 an ounce.