* South Korean stocks catch up with tech rally, S&P

futures flat

* Oil flat, US launches effort to free ships from Strait

of Hormuz

* Busy week for earnings includes AMD, Super Micro

* Payrolls data to shape outlook for Fed policy

By Wayne Cole

SYDNEY, May 4 (Reuters) - Shares edged higher while oil

prices flatlined in Asia on Monday, as investors drew comfort

from signs of patchy progress in settling the Middle East

conflict at the start of a week packed with earnings and key

economic data.

President Donald Trump said the United States would begin an

effort to free up ships stranded in the Strait of Hormuz on

Monday morning, but gave no details of the plan.

A statement from Central Command said support would include

guided-missile destroyers, over 100 land and sea-based aircraft

and 15,000 service members.

Iran earlier said that the U.S. had responded to its

14-point proposal via Pakistan and that it was reviewing the

response, though Trump said it was unlikely to be acceptable.

Brent crude futures were flat at $108.30 per barrel,

having recovered from an initial drop of more than 2%, while

U.S. crude was steady at $102.01.

Dealers noted a bulk carrier had reported being attacked by

multiple small craft while transiting Iran's Sirik on Sunday,

and it was not clear how many ships would try and run the Strait

of Hormuz even with Navy protection.

A holiday in Japan made for thin trading conditions, leaving

Nikkei futures up only modestly at 59,630 versus a cash

close of 59,513. MSCI's broadest index of Asia-Pacific shares

outside Japan gained 0.6%, while South Korean

stocks returned from holiday with a jump of 2.6%.

EUROSTOXX 50 futures and DAX futures each

added 0.1%, while FTSE futures dipped 0.4%.

S&P 500 futures and Nasdaq futures were little

changed, as markets braced for more than 100 earnings reports

this week. Companies reporting include Advanced Micro Devices ( AMD )

, Super Micro Computer Inc ( SMCI ), Palantir,

Walt Disney ( DIS ) and McDonald's.

The S&P 500 EPS growth rate was running at 25%, and

accounting for one-off gains at a still brisk 16%, said analysts

at Goldman Sachs in a note.

"Despite elevated energy prices and geopolitical

uncertainty, corporate guidance and analyst estimate revisions

have remained strong so far this quarter," they said. "However,

the reward for EPS beats has been unusually small."

CENTRAL BANKS WARN OF INFLATION RISKS

Concerns remained about the scale of AI capex investment

which was now up at $751 billion for 2026, $80 billion above

estimates at the start of the earnings season and 83% above

spending in 2025.

The threat of oil-driven inflation had also lifted bond

yields in a challenge to equity valuations, while several major

central banks had turned hawkish on policy.

Markets implied just 2 basis points of easing from the

Federal Reserve by year-end compared to 11 basis points a week

ago. Expectations for the European Central Bank had climbed to

76 basis points of hikes, with the Bank of England on 63 basis

points.

Australia's central bank meets on Tuesday and is considered

likely to hike its cash rate for a third time running as it

battles stubborn inflationary pressures.

The outlook for Fed policy could be budged by a raft of data

this week which includes the payrolls report for April on

Friday. Median forecasts are for a rise of 60,000 in jobs

following March's outsized 178,000 gain, though problems with

seasonal adjustment make for much uncertainty.

Analysts at Citi, for instance, are predicting a 15,000 drop

in payrolls, and a rise in unemployment to 4.3%.

In currency markets, the dollar was a shade softer as

investors waited for more developments in the Middle East and,

crucially, whether the Strait of Hormuz could be opened.

The dollar was off 0.1% at 156.94 yen, still

smarting from last week's Japanese intervention which analysts

thought could have amounted to around $35 billion.

The euro was flat at $1.1723, while the pound held

at $1.3575 ahead of local elections in the UK which could

see heavy losses for the ruling Labour Party.

In commodity markets, gold was 0.2% lower at $4,603 an ounce

, and well within recent trading ranges.

(Reporting by Wayne Cole;)