* South Korean stocks rally, Wall St futures firm

* China trade figures strong, offsets domestic demand

* Iran and Israel put attacks on hold, for now

* Bonds on defensive as markets brace for rate hikes

(Updates prices to Asia afternoon)

By Wayne Cole

SYDNEY, June 9 (Reuters) - Asian stock markets rallied on

Tuesday and oil prices fell back after Israel and Iran said they

would halt attacks on each other for now, while ever-hopeful

investors bought the latest dip in semiconductor stocks.

Analysts cautioned the bounce was narrowly based with 60%

of the S&P 500 finishing in the red overnight even as the

overall index edged up. Share futures for Wall Street did edge

up in early trade, but European futures slipped.

Higher bond yields continued to test stretched equity

valuations, with shipping through the Strait of Hormuz still

badly restricted.

"Inflation remains sticky enough that 46 of 68 global

central banks are overshooting targets, which helps explain why

bond markets are repricing for tighter policy, and why

long-duration assets, private credit, and several EM currencies

are struggling," analysts at BofA said in a note.

"Our Global Breadth Rule shows nearly half of equity markets

already overbought, led by Korea, Taiwan and Finland."

South Korea's share market rebounded 7%, having sunk

more than 8% on Monday after a run of spectacular gains left

valuations stretched and retail investors with extended margin

positions.

Japan's Nikkei firmed 2.1%, after losing 3.9% the

previous session, while MSCI's broadest index of Asia-Pacific

shares outside Japan rose 3.0%.

Chinese blue chips added 0.9% as trade data showed

exports rose 19% in May and imports climbed 27%, with both

beating median forecasts. The strength shows China's success in

finding new markets in the face of U.S. tariffs and other trade

hurdles, even as domestic demand struggles.

For Europe, EUROSTOXX 50 futures and DAX futures

both fell 0.2%, while FTSE futures dipped 0.1%.

S&P 500 futures added 0.2% and Nasdaq futures

rose 0.5%. The next big test for tech will be results from

Oracle on Wednesday.

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Apple ( AAPL ) shares failed to get any initial boost from a

long-delayed AI overhaul of Siri, unveiled at its annual

Worldwide Developers Conference.

ChatGPT-maker OpenAI confidentially filed for a U.S. initial

public offering on Monday, joining rival Anthropic in a

trillion-dollar rush for equity financing.

Bond markets continued to struggle as the strong May U.S.

payrolls report pushed investors to price in more risk of rate

hikes from the Federal Reserve. Data on U.S. consumer prices due

Wednesday are expected to show surging energy costs kept pushing

headline inflation higher in May.

Futures imply around a 60% chance of a Fed rate rise as soon

as October, and a quarter-point move is almost fully priced for

December.

Two-year Treasury yields stood at 4.170%, having

hit their highest since early 2025 at 4.201% overnight.

Markets are also fully priced for a quarter-point hike to

2.25% from the European Central Bank when it meets on Thursday,

and see the key rate at 2.5% or 2.75% by year-end.

The surprising strength of U.S. employment kept the dollar

underpinned at 160.20 yen, just off an overnight top at

160.395. The next bull target is a 160.725 peak from April,

though investors are wary a break could draw renewed

intervention from Japanese authorities.

The euro hovered at $1.1538, after hitting a

nine-week low at $1.1500 overnight, while the pound edged

up off a three-week trough to $1.3347.

In commodity markets, Brent crude eased 0.9% to

$93.40 a barrel, after pushing as high as $98.00 overnight,

while U.S. crude slipped 1.2% to $90.14 a barrel.

Gold was near flat at $4,331 an ounce, having touched

a two-month trough at $4,268.39 on Monday.