* 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

(Adds Axios report, Chinese stocks and updates prices)

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 U.S. would begin an effort

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

morning, though he gave no details of the plan.

A statement from the U.S. Central Command said support would

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

aircraft and 15,000 service members. A report from Axios later

claimed the Navy would not necessarily escort ships through the

strait.

Iran earlier said the U.S. had responded to its 14-point

proposal via Pakistan and it was reviewing the response, though

Trump said it was unlikely to be acceptable.

Investors decided to reserve judgement and left Brent crude

futures little changed at $108.35 per barrel, having

recovered from an initial drop of more than 2%, while U.S. crude

eased 0.1% to $101.85.

Dealers noted a bulk carrier had reported being attacked by

multiple small craft while transiting past Sirik in Iran on

Sunday, though it was not clear how many ships would try to run

through the Strait of Hormuz even with Navy protection.

A holiday in Japan made for thin trading conditions, leaving

Nikkei futures up only modestly at 59,880 versus a cash

close of 59,513.

MSCI's broadest index of Asia-Pacific shares outside Japan

gained 2.8%, led by tech-heavy South Korean

stocks which returned from holiday with a jump of 4.05%.

Chinese blue chips were off 0.06%.

EUROSTOXX 50 futures and DAX futures each

added 0.3%. S&P 500 futures gained 0.1% and Nasdaq

futures rose 0.3%, as markets braced for more than 100

earnings reports this week.

Companies reporting include Advanced Micro Devices ( AMD ),

Super Micro Computer ( 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 artificial intelligence

capex investment which was now at $751 billion for 2026, $80

billion above estimates at the start of the earnings season and

83% above 2025 spending.

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 the end of the year compared with 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 at 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 steady at 157.21 yen, still

smarting from last week's Japanese intervention which analysts

thought could have amounted to around $35 billion.

The euro was flat at $1.1726, while the pound held

at $1.3584 ahead of local elections in Britain 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.