* Asian stocks set for consecutive weeks in the red

* Traders rapidly cut Fed rate cut wagers for the year

* Investors focus on oil prices, inflation risks

* Dollar stands tall, pushing yen to 20-month lows

(Updates to Asia afternoon)

By Ankur Banerjee

SINGAPORE, March 13 (Reuters) - Asian stocks slumped on

Friday, poised for a second straight weekly decline as

fast-dwindling hopes of a resolution to the U.S. and Israel's

war with Iran kept oil prices aloft, casting a shadow over

global markets and spurring inflation fears.

The U.S. dollar has become the safe-haven of choice during

the tumult, putting most other currencies under pressure. The

dollar was set for a second consecutive week of gains and is up

2% since the war broke out at the end of February.

The yen hit its weakest level since July 2024 at

159.69 per U.S. dollar on Friday as Japan warned that it was

ready to take action to protect against yen declines. It was

last at 159.41.

Analysts said the bar for intervention is higher this time

around as any intervention now could prove futile in the face of

the relentless dollar buying.

In Asia, MSCI's broadest index of Asia-Pacific shares

slipped 1%, on course for a 2.2% decline for the

week. Japan's Nikkei fell 1.4%, while tech-heavy South

Korean stocks slid nearly 2%.

European futures point to a slightly higher open

but may struggle to hold those gains on weak sentiment.

Oil prices remained close to $100 per barrel level, although

they eased a bit on Friday after U.S. issued a 30-day license

for countries to buy Russian oil and petroleum products

currently stranded at sea.

Brent futures were last at $100.30 a barrel, while

West Texas Intermediate crude was at $95.37 a barrel.

They were both hovering around $60 levels at the start of 2026.

"Headlines are coming at the market like water from a fire

hose, which is impacting the price of oil, and consequently,

financial markets," said Mitch Reznick, group head of fixed

income at Federated Hermes.

"The question remains to what extent we are caught in the

$80-plus range even as the headlines become banal with their

frequency and contradictions."

With Iran stepping up attacks across the Middle East as its

new Supreme Leader Mojtaba Khamenei vowed to keep the Strait of

Hormuz shipping lane closed, investors are bracing for a

prolonged conflict and higher oil prices.

The spectre of rising inflation has led markets to rapidly

reprice what they expect from central banks this year, with

traders now anticipating just 20 basis points of easing from the

Federal Reserve compared to 50 bps of cuts priced in last month.

The selloff in global stocks and bonds shows no signs of

easing. U.S. stocks fell sharply overnight and the two-year

Treasury yields, which typically move in step with Fed interest

rate expectations, scaled a six-month high on Thursday.

"With the possibility of higher oil prices still elevated,

investors should be prepared for continued volatility and

potentially further downside in the near term," said Vasu Menon,

managing director of investment strategy at OCBC in Singapore.

SHIFTING RATES OUTLOOK

Jose Torres, senior economist at Interactive Brokers, said

the impact of rising oil prices on corporate margins, inflation

expectations, rate-cut prospects and yields is sparking

volatility, leaving participants with few places to hide.

"Indeed, sinking optimism about Fed rate reductions amid

strengthening cost pressures is weighing on traditional safe

havens such as silver, gold, and government debt."

The two-year note yield eased 3 bps to 3.730%

after hitting its highest level since August 22 on Thursday. The

yield has gained 35 bps in the two weeks since the war started.

The yield on the longer-dated 30-year bond has

risen 24 bps this month.

Investor focus will switch to a slate of policy meetings

next week with the Fed, the Bank of Japan, the European Central

Bank and the Bank of England all due to meet, with most expected

to keep rates unchanged. The Reserve Bank of Australia is

broadly expected to hike rates next week.

In currencies, the euro was steady at $1.15035, on

course for a weekly decline of nearly 1%. The dollar index

was at 99.816, set for about a 1% weekly advance.

Gold was 0.4% higher at $5,101 per ounce on Friday

but set for a 1% drop for the week.