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* Futures up: Dow 0.34%, S&P 500 0.41%, Nasdaq 0.38%

March 30 (Reuters) - U.S. stock index futures kicked off

a holiday-shortened week with gains on Monday, after the indexes

logged sharp declines in the previous session, as investors

assessed the impact of the escalating Middle East conflict.

Yemen's Iran-backed Houthi militia entered the war over the

weekend and more U.S. troops arrived in the Middle East as

President Donald Trump said he wanted to "take the oil in Iran"

in a Financial Times interview.

Still, investors drew comfort from Trump's comments that the

U.S. and Iran had been meeting "directly and indirectly" and

Pakistan, acting as intermediary, said "meaningful talks" could

be hosted in coming days.

"The market is grappling with two major unknowns that feed

directly into each other: when oil flows will resume in

meaningful volumes, and at what price level oil switches from an

inflation story to a recession story," said Stefan Koopman,

senior macro strategist at Rabobank.

Koopman also said seizing Iran's Kharg Island would only

choke its export capacity and push global oil prices higher.

Oil prices gained again on Monday and energy stocks inched

higher with Exxon Mobil ( XOM ) and Chevron ( CVX ) up about

1.4% each in premarket trading.

Wall Street's main indexes ended their fifth consecutive

week in the red on Friday, and the blue-chip Dow confirmed it

was in correction territory after closing more than 10% below

its record high.

The Nasdaq and the small-cap Russell 2000 have also

confirmed correction territory since the war began. The

benchmark S&P 500 is a little over 1% away.

Wall Street brokerage Morgan Stanley downgraded global

equities to "equal weight" from "overweight", but said fund

flows to U.S. equities and bonds had overtaken the rest of the

world since the conflict began, indicating it might re-emerge as

a safe haven for investors.

At 05:25 a.m. ET, Dow E-minis were up 156 points, or

0.34%, S&P 500 E-minis were up 26 points, or 0.41% and

Nasdaq 100 E-minis were up 87.75 points, or 0.38%.

U.S. markets will be shut on Friday for the Good Friday

holiday.

The spike in oil prices resulting from the Iran conflict has

revived inflation fears, putting central banks in a tough spot

with regard to interest rates.

Money market participants are not pricing in any easing from

the Federal Reserve this year, compared with two cuts before the

war began, per CME Group's FedWatch Tool.

A host of labor market data including the nonfarm payrolls

figures for March are scheduled for release this week and that

could provide more insights on the health of the economy.

Comments from Fed Chair Jerome Powell and New York Fed

President John Williams later in the day will also be parsed.

Shares of aluminum producers climbed before the bell as

prices of the metal were trading around four-year peaks. Alcoa ( AA )

and Century Aluminum ( CENX ) gained 8.4% and 7.2%,

respectively.