Some of the concern that rattled investors last week about global central banks possibly embarking on a hiking cycle subsided, as the oil price edged back towards $100 a barrel, from highs last week above $109.
"Maybe things got a little bit apocalyptic last week, and they're just easing off. But obviously the direction of travel in oil prices is still higher. This is just a minor correction," IG chief market strategist Chris Beauchamp said.
"Then again, the AI demand was cited overnight as the reason why tech stocks have bounced, so the ongoing themes just keep coming back to the fore ... it's just the sort of the dance where one narrative prevails over the other for the time being," he added.
Against that backdrop, central banks in most major economies are expected to raise rates again this year. Hawkish guidance from the Federal Reserve last week has futures wagering on a 56% chance it will hike rates again in October, with a move by year-end considered a done deal.
Bonds have been hit hard as a result, with the average 10-year yield for the Group of Seven biggest economies at its highest since 2008 around 4.2%.
Concern about the impact of inflation, as well as over governments' long-term finances, hit French debt on Friday, sending its risk premium to the highest since the 2012 euro zone debt crisis.
In Germany, Chancellor Friedrich Merz's mainstream conservative party suffered its worst election results since 1949. But the driving force for bonds remained the drop in oil, leaving German 10-year yields down 5 basis points at 3.472% and French 10-year yields 10 bps lower at 4.469%, unwinding almost all Friday's rise.
In foreign exchange, the dollar edged up 0.2% against the yen to 157.2 JPY=, with investors wary in case the Bank of Japan took advantage of the lack of liquidity during the country's three-day Silver Week holiday to step in to buy the currency.
The yen jumped on Friday after Japanese authorities conducted rate checks in the currency market, the Nikkei newspaper reported.
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