By Shivansh Tiwary and Rashika Singh

(Reuters) -Shares of U.S. and European airlines rose on Tuesday, while oil prices declined on expectations that a ceasefire between Israel and Iran would hold.

Air France KLM, British Airways owner, Lufthansa were up between 6% and 10%, while Wizz Air gained 3.2%.

U.S. legacy carriers United Airlines, Delta Air Lines and American Airlines were up about 4% each in morning trade. Smaller rivals Alaska Air and JetBlue Airways were also up 3.5% and 6%, respectively.

U.S. President Trump said on Tuesday Israel had called off its attack in response to his command to preserve an hours-old ceasefire.

However, Iranian and Israeli media reported new Israeli air strikes on Iran minutes after Trump made these comments before heading off to The Hague for a NATO summit.

"There had been a relief wave pulsing through the travel sector, amid hopes that grounded flights could take to the skies again, but pessimism has crept back in," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Airlines worldwide cancelled flights to several Middle Eastern destinations, including major international hubs such as Dubai and Doha, as several countries closed their airspace after Iran attacked the Al Udeid U.S. military base in Qatar on Monday.

Qatar and the United Arab Emirates have since reopened their airspace.

"Travel stocks moved higher, both on the implications for fuel costs and as the potential hit to foreign travel appetite that might have resulted from any further escalation of Middle East tensions seems to have been swerved," said AJ Bell investment director Russ Mould.

ENERGY STOCKS TAKE A HIT

Oil majors took a hit after crude prices fell to their lowest in two weeks. Oil has lost 10% in value in the last week.

"Assuming the ceasefire holds, it reinforces our view that de-escalation was more likely than a full blockade of the Strait of Hormuz - a move that would have triggered a sharp spike in oil prices," Mukesh Sahdev, global head of commodity markets at Rystad Energy, said in a note.

"With this in mind, we expect oil prices to hold near the $70 per barrel level while clarity on a US-Iran deal emerges, assuming the ceasefire holds."

European energy stocks dropped 3%, with BP and Shell falling around 5% and 4%, respectively, while Norway's Equinor fell around 7%.

Meanwhile, shares of Exxon and Chevron were down about 1.5% each.

(Reporting by Shivansh Tiwary, Rashika Singh, Samuel Indyk and Anna Pruchnicka, additional reporting by Vallari Srivastava; Editing by Amanda Cooper and Tasim Zahid)