* Dollar weakens as ceasefire hopes reduce safe-haven

demand

* Ongoing attacks in Middle East keep markets cautious

despite talks

* US jobs data and Fed rate expectations remain key

market drivers

(New throughout, updates with analyst comment and U.S. markets)

By Chibuike Oguh and Samuel Indyk

NEW YORK/LONDON, April 1 (Reuters) - The dollar fell for

the second straight session on Wednesday amid growing signs of a

possible ceasefire in the Middle East conflict, which will

likely ease market volatility.

President Donald Trump said in a Reuters interview that the

U.S. will end its war on Iran fairly soon and could return for

"spot hits" if needed. He had earlier said in a Truth Social

post that Iran's new leader asked for a ceasefire.

Trump is scheduled to address the nation "to provide an

important update on Iran" at 9 p.m. EDT on Wednesday (0100 GMT

on Thursday).

The U.S. dollar has benefited from a safe-haven bid since

the conflict began in late February. Expectations that a

ceasefire could be near have reversed some of the markets' most

popular trades.

The dollar pulled back from this year's high of 160.47 per

dollar against the Japanese yen, moving back through the

psychologically important 160 level that had fanned concerns

about intervention by Japanese authorities. The euro hit its

highest level in a week.

The euro edged up 0.63% versus the dollar to $1.1621,

on track for the second consecutive session of gains.

The dollar was down 0.16% to 158.45 against the Japanese yen

. Sterling strengthened 0.78% to $1.3310.

"What's going on now with the reversal and the risk to a

degree is not surprising because of how dislocated everything

got," said Eugene Epstein, head of trading and structured

products at Moneycorp in New Jersey.

The dollar index, which measures the currency against

a basket of currencies including the yen and the euro, was last

down 0.37% at 99.353.

Still, attacks continued to take place on multiple fronts on

Wednesday, with drones hitting fuel tanks at Kuwait's

international airport, while Qatar said an oil tanker was struck

by an Iranian cruise missile in Qatari waters.

Oil prices slid, with Brent crude futures dropping

2.44% and were last trading at about $101.50.

US JOBS DATA IN VIEW

This week's main U.S. economic focus will be Friday's jobs

report for March. It is expected to show that employers added

60,000 jobs during the month, according to the median estimate

of economists polled by Reuters, following an unexpected loss of

92,000 jobs in February.

A sharp deterioration in the labour market would likely

revive expectations for rate cuts from the Federal Reserve this

year, which have been largely priced out as rising oil prices

from the Iran war stoked inflation concerns.

"You might have a short-term increase in inflation but

because this is a supply shock, it will eventually manifest

itself in slower economic growth," Epstein said.

"And the Fed is not going to be raising rates into the

potential of a slowdown in economic growth. I think that's been

a major misconception in the market and why the dollar has

rallied so much. So what's going on now is the unwind of that."

The dollar weakened 0.85% to 0.792 against the Swiss franc

, on track for the second straight session of losses.

The dollar weakened 0.21% to 6.873 versus the

offshore Chinese yuan. The Australian dollar

strengthened 0.65% versus the greenback to $0.6945.