LONDON - World markets rapidly reversed course on Monday after U.S. President Donald Trump said he will order the military to postpone any military strikes against Iranian power plants and energy infrastructure, easing uncertainty and fear over the repercussions of a deeper oil shock.

The reaction from markets was swift and marked: Brent crude oil futures fell sharply, the dollar fell against other major currencies, stock markets rallied and government borrowing costs fell back.

"Trump has instructed a five-day pause...that basically triggered what I would call some sort of “TACO” movement in markets where we have seen all prices move lower and rates rallying," said Evelyne Gomez-Liechti, multi-asset strategist for global markets at Mizuho.

Trump said the postponement followed productive conversations with Iran. Headlines from Iranian media that contradicting Trump's comments, tempered market moves, Gomez-Liechti noted.

Still, the overall positive sentiment appeared to prevail for now.

U.S. stock futures were 1.9% higher, pointing to a strong open on Wall Street ESc1, while European stocks were last up 0.6% having risen by as much as 2%.

In government bond markets, yields which had risen sharply higher ahead of the Trump comments, were down sharply.

Britain's battered two-year bond yield got a respite, last down about 11 basis points on the day GB2YT=RR.

U.S. Treasury yields were 2-5 bps lower across, with 10-year yields last down 4 bps at 4.35% US10YT=RR.

The dollar was broadly soft, having traded higher against most other currencies until the headline hit.

The euro EUR= was last flat at $1.156, up from an earlier low of $1.487.

"It’s clearly jaw boning in the face of the meltdown that we've seen. We're seeing a bit of a knee-jerk reaction to this positive news," said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

"If it's a legitimate de-escalation, we could see a bit more of a relief rally in risk assets."

Brent crude oil was last down over 7% at $103.5 a barrel.

-Reporting by Dhara Ranasinghe; additional reporting by Lucy Raitano; Editing by Amanda Cooper and Elisa Martinuzzi/Reuters