A vacuum-assist fuel dispensing nozzle has a body defining a fuel supply passage and a vapor return passage each having a control valve operated simultaneously by a hand actuated lever pivotally connected to an axially movable tubular member retained by a diaphragm actuated clutch. A fuel dispensing spout extends from the body and a fuel responsive poppet valve, and the spout encloses an air bleed passage which actuates the clutch. The housing supports a vapor flow responsive valve within the vapor passage and includes a ferrous valve member or disc movable within retainers between a closed position contacting an annular seat to block the flow of vapor and an open position permitting a free flow of vapor through the vapor passage. A circular magnet is supported by the retainers and magnetically attracts the valve disc to the closed position in response to no flow of vapor through the vapor passage.