Global stocks rallied and oil prices reversed gains on Wednesday as hopes of a de-escalation in the Iran conflict fuelled the biggest rebound in regional equities in more than three years.President Donald Trump said the US. could end its military attacks on Iran in two to three weeks, and could return for “spot hits”, if needed.The US. dollar softened against a basket of other currencies, while US. Treasury yields rose from their lows after a pair of reports underscored resilience in the US. economy, affirming expectations the Federal Reserve will hold off cutting interest rates for some time.On Wall Street, stocks rose withe the Dow Jones Industrial Average rose 0.55% to 46,594.37, the S&P 500 gained 0.63% to 6,569.57 and the Nasdaq Composite climbed 1.01% to 21,808.66.In Europe the STOXX 600 jumped 2.24% on strength from travel and aerospace and defense stocks.Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan closed up 4.57% and Japan’s Nikkei rallied 5.24%“Markets are trading this narrative that the war could be over, or at least that the US. could withdraw. That is creating this positive sentiment in risk assets,” said Evelyne Gomez-Liechti, multi-asset strategist at Mizuho, though she added she is more inclined to be sceptical about the rally.IRAN WAR DEVELOPMENTSThe rally in global stocks shrugged off a report in the Wall Street Journal that the UAE may enter the conflict and is lobbying for a U.N. Security Council resolution to authorise it to take part in military action to force open the Strait of Hormuz. US. Secretary of State Marco Rubio said Washington will have to reexamine its relations with NATO after the war ends.Trump will provide an update on Iran in an address to the nation at 9 p.m. ET on Wednesday (0100 GMT on Thursday), White House spokeswoman Karoline Leavitt said on X.Brent crude futures fell 2.23% to $101.65 a barrel and U.S. crude dropped 2.19% to $99.16.Euro zone bond yields dropped on hopes of de-escalation in the Middle East. Germany’s 10-year yield, the benchmark for the euro zone, dropped to a two-week low of 2.93% in early trading and was last at 2.96%. The US. dollar index slipped 0.3% to 99.43, extending losses from the prior session’s biggest one-day drop in two weeks.The yield on benchmark US. 10-year notes rose 0.8 basis points to 4.319%. The 2-year note yield, which typically moves in step with Fed interest rate expectations, rose 0.2 basis points to 3.803%.Fed funds futures are pricing an implied 17.9% chance that a 25-basis-point cut to interest rates could come at the Fed’s two-day meeting ending on July 29, up from a 7.5% chance a day earlier, according to the CME Group’s FedWatch tool.Even so, swaps pricing indicates the odds of a cut by April next year are viewed as little better than a coin toss.A PMI survey showed euro zone manufacturing growth bounced to its strongest in nearly four years in March as supply chain disruptions inflated growth figures.The International Energy Agency head Fatih Birol said on Wednesday that oil supply disruptions from the Middle East will rise in April and begin to impact Europe’s economy as the closure of the Strait of Hormuz severely curbs supplies.The euro was close to a three-week high versus the dollar .In commodities, gold rose for a fourth session as the dollar slipped, making the metal less expensive to holders of other currencies. Spot prices rose 1.57% to $4,742.70 an ounce.