* Dollar index hits highest since May 2025

* Yen recovers on intervention threats

* AUD, NZD break down to multi-month lows

SINGAPORE, March 31 (Reuters) - The dollar headed for

its biggest monthly gain since July on Tuesday and stands out as

the strongest so-called safe asset as war in the Mideast has set

oil prices surging and raised the risk of global recession.

Overnight the dollar extended gains widely, save for against

the yen where renewed threats of intervention from Tokyo have

traders wary of selling the yen too far past 160 per dollar.

Having touched its weakest since July 2024 a day earlier, the

yen traded at 159.81 in the Asia morning on Tuesday, down

about 2.4% on the month owing to Japan's import exposure to

skyrocketing energy prices. It was little changed on data

showing a small slowdown in Tokyo inflation this month.

The euro slipped 0.3% overnight, and is headed for a

monthly drop of about 3%, and the Australian and New Zealand

dollars slid to multi-month lows.

The Aussie, after holding up for much of the month,

has notably started to crack in recent sessions as markets have

shifted the focus of worries from inflation to global growth.

The currency hit a two-month low of $0.6834 overnight and

traded at $0.6844 in the Asia morning. The New Zealand dollar

has also crumbled and hit a four-month trough of 57 cents on

Monday, and last traded nearby at around $0.5716.

South Korea's won hit its weakest since 2009.

The U.S. dollar index touched its highest since last

May on Monday at 100.61 and is up 2.9% through March, its

sharpest monthly rise since last July.

U.S. President Donald Trump warned on Monday the U.S. would

obliterate Iran's energy plants and oil wells if Tehran does not

open the Strait of Hormuz, after Tehran described U.S. peace

proposals as "unrealistic" and fired missiles at Israel.

Kuwait said a fully-laden Kuwaiti oil tanker was struck by

an Iranian attack while anchored at Dubai, Kuwait's state news

agency KUNA reported on Tuesday, pushing up oil prices.

"Barring any clear, conciliatory messages from the Iranian

side, it is hard to see the dollar handing back this month's

gains anytime soon," said Chris Turner, ING's global head of

markets.

Federal Reserve Chair Jerome Powell talked down the

likelihood of imminent rate hikes on Monday, reiterating the

U.S. central bank's wait-and-see approach and saying inflation

expectations seem anchored, beyond the short term.

That pulled short-dated bond yields lower and knocked out

expectations for any U.S. hiking this year, but didn't really

wobble the dollar because it tends to benefit from a safety bid

when the outlook for global growth is negative.

Other havens like bonds and gold have both performed poorly

since war broke out and with the yen failing to fire, threats

from the Swiss National Bank to combat currency strength have

turned investors off the Swiss franc as a haven.

The dollar is up nearly 4% for the month on the franc

at 0.80 francs. March inflation data is due later in the session

in Europe along with Chinese PMI surveys.

(Reporting by Tom Westbrook in Singapore; Editing by Lincoln

Feast.)