* Hopes of end to conflict evaporate after Trump speech

* Oil surges as stagflation risks swirl, denting risk

assets

* Stocks sharply lower as Trump speech provides little

clarity

* Investors likely to stay defensive as Trump ramps up

threats

(Updates ahead of Wall Street open)

By Marc Jones

LONDON, April 2 (Reuters) - Oil prices surged and global

equity and bond markets recoiled again on Thursday after U.S.

President Donald Trump dashed hopes of a swift resolution to the

Middle East war.

Brent crude jumped more than 7% to above $109 a

barrel after Trump said in a prime-time address on Wednesday

that the U.S. would hit Iran "extremely hard" in the coming

weeks and "bring them back to the Stone Ages where they belong".

Although he also said the U.S. campaign was nearing an end,

the renewed rhetoric sent the pan-European FTSEurofirst 300

and Wall Street futures down by between 1.3% and 1.8%,

after Asian stocks had taken a beating overnight.

Government bond yields jumped on expectations that an

inflation spike would force central banks to raise interest

rates, or at least keep them on hold.

The dollar, which has reasserted its role as a safe-haven

currency, rose too, pushing the euro down 0.5% to $1.1526

and sterling below $1.32.

"Over the past 48 hours, Tehran and Washington have

exchanged a cacophony of statements, some suggesting rising odds

of de-escalation. At the same time, kinetic action has continued

unabated," BCA Research's Felix-Antoine Vezina-Poirier said.

"Our GeoMacro strategists offer simple guidance for weighing

volatile headlines: Stick to the facts. First, shipping through

Hormuz has picked up over the past few days. Second, Iran is

deliberately shifting away from GCC targets toward Israeli

ones."

WALL STREET POINTS LOWER, ASIA CLOBBERED

Wall Street's S&P and Nasdaq futures were pointing

1.4% and 1.9% lower respectively, although energy stocks bucked

the trend, with Exxon Mobil ( XOM ) and Chevron ( CVX ) both up

about 3%. The sector is the only one to have gained since the

war erupted.

In a closely watched address on Wednesday, Trump said U.S.

attacks on Iran would be intensified over the next two to three

weeks. That came just a day after he told Reuters the U.S. would

be "out of Iran pretty quickly".

Asian equities bore the brunt of the subsequent reaction

, with Japan's Nikkei closing down 2.4%

and South Korea's Kospi index sliding 4.7%. Both indexes

are heavily weighted towards energy-intensive chipmakers and

technology firms.

"The only thing that really matters is whether the Strait of

Hormuz will open soon," said Prashant Newnaha, senior rates

strategist at TD Securities, referring to the narrow chokepoint

through which a fifth of global oil and liquefied natural gas is

shipped.

"Trump's speech doesn't imply this is likely to happen as

quickly as the markets were expecting."

Trump said on Wednesday the U.S. did not need the key oil

gateway and that it would open naturally once the conflict was

over.

Ten-year U.S. Treasury yields - a major driver

of global borrowing costs - climbed 5 basis points to 4.376%.

Benchmark European yields were up a similar

amount at just over 3%, though both were still on track for

their first weekly drop since the war began.

Gold and silver fell 3% and 5.7% respectively, as a modest

bounce over recent days came to an abrupt halt and the dollar

index climbed back above 100.05, after dropping nearly 1%

in the previous two days on optimism the war might end soon.

There were also growing signs of urgency in oil-importing

emerging markets.

India's central bank moved to ban trading of so-called

non-deliverable forwards in an effort to halt the rupee's run of

record lows. The move sent the currency up 2%, although

analysts questioned how long the rebound would last.

With Brent futures back up to $109.60 per barrel and

U.S. West Texas Intermediate at $109.14, it was the war -

and the roughly 80% leap in oil and natural gas prices

so far this year - that remained investors' main

focus.

"The fact that we can expect 2-3 more weeks of action, boots

on the ground were not ruled out (during Trump's TV address) and

that threats to hit infrastructure were reiterated, will put the

market back on the defensive," Pictet Asset Management's Jon

Withaar said.

(Additional reporting by Ankur Banerjee in Singapore. Editing

by Mark Potter)