PARIS, April 23 (Reuters) - Recovery hopes for the French luxury giant LVMH LVMH.PA hinge on the outcome of the crisis in the Middle East, CEO and controlling shareholder Bernard Arnault said on Thursday.

"You will have noticed that the world is now in a very serious crisis in the Middle East," Arnault said at the company's annual shareholder meeting in Paris, adding: "It all depends on how this crisis unfolds". 

LVMH shareholders are set to face yet another bumpy year as the crisis in the Middle East dampened market hopes for a luxury sector recovery after close to three years of stagnation. 

Earlier this month, the group said the Iran war shaved at least 1% off its total group sales in the first quarter and reduced tourist flows to Europe.

Addressing shareholders on Thursday, Arnault said that LVMH can return to growth across its divisions if the Middle East conflict gets resolved quickly. 

Should the crisis spiral into a "global catastrophe", Arnault said it was impossible to predict the outcome.

The status of a two-week-old ceasefire, due to have expired earlier this week, remained unclear on Thursday.

Iran seized two ships in the Strait of Hormuz as it tightened its grip on the strategic waterway after U.S. President Donald Trump announced he was indefinitely calling off attacks, with no sign of peace talks restarting.

Shares in LVMH, the biggest luxury group by sales, are down 26% since the start of the year, and 3% lower than their level at the group's last shareholder meeting a year ago. 

(Reporting by Tassilo Hummel, Dominique Vidalon, editing by Inti Landauro)