* Brent tops $100/barrel on renewed Mideast hostilities

* Taiwan, Japan, South Korea markets have strong weekly

gains

* Yen hovering around 157; markets on edge for

intervention

(Updates for European morning trading)

By Tom Westbrook and Samuel Indyk

LONDON, May 8 (Reuters) - Oil prices rose and stocks

slipped as the U.S. and Iran exchanged fire in the Middle East,

though many equity markets, particularly in Asia, were headed

for stellar weekly gains on booming AI demand.

Benchmark Brent crude futures were up about 1% to

$101 a barrel, while European stocks fell 0.9%.

Traders were also keeping an eye on Labour Party losses in

British elections, which could pressure Prime Minister Keir

Starmer's leadership, though sterling inched up, and British

bonds and stocks traded in line with European peers as results

were coming in.

MIDDLE EAST CLASHES

The United States and Iran clashed in the Gulf and the UAE came

under renewed attack in a test of a month-long ceasefire, but

the warring parties downplayed the situation, leaving investors

guessing.

"The market seem to be taking every chance to price in a

quick end to the war," said Jan von Gerich, chief analyst at

Nordea.

"But it seems unlikely there's going to be an agreement. I

still think there are going to be disruptions in the Strait (of

Hormuz) for a longer time and it won't be resolved any time

soon."

Stock markets in Europe were lower. The pan-continental

STOXX 600 was down 0.9%, while major bourses in

Frankfurt and Paris were off a similar amount.

Stock markets in Asia, which have been soaring thanks to

strong revenue and spending plans from the U.S. AI hyperscalers

- which will benefit the region's chipmakers - slipped slightly

from record highs.

MSCI's broadest index of Asian shares outside Japan

fell 1%, although South Korea's KOSPI

inched up 0.1%, for a weekly gain of more than 13.5% - the

largest since 2008 - on the back of a surge in Samsung

and SK Hynix.

Taiwan's benchmark was up 7% this week and Japan's Nikkei

rose 5.4%. The European benchmark was heading for a 0.1%

weekly fall.

DOLLAR INCHES LOWER

Currency markets were broadly steady with the dollar falling

slightly and heading for its second straight weekly loss,

although the yen remained in focus. Japan intervened in the

foreign exchange market during holidays in early May to stave

off further falls in the battered currency, a source familiar

with the matter told Reuters.

The dollar was last down 0.1% to 156.8 yen, and was

set for its second weekly fall against Japan's currency,

although it struggled to sustain gains beyond 155 after surges

on suspected intervention to the tune of nearly $70 billion

since last Thursday.

The euro bought $1.1742. China's yuan, Asia's

best-performing currency since the war broke out, is on the cusp

of strengthening past 6.8 to the dollar and sits near its

strongest since 2023.

U.S. JOBS AND UK ELECTIONS IN FOCUS

Investors are awaiting the U.S. non-farm payrolls report on

Friday, with jobs expected to have increased in April by 62,000

after rebounding 178,000 in March, a Reuters survey of

economists shows.

"The labour market is still holding up reasonably well,"

Nordea's von Gerich said.

"Since the focus is on the Middle East and the impact comes

via inflation more than growth, especially in the U.S., maybe

the payrolls report is not quite as crucial as it has been

sometimes in the past."

Local government elections across Britain showedheavy early

losses for the ruling Labour Party, although Prime Minister

Starmer said he would not resign.

"Gilts are already under scrutiny due to inflation risks,

and adding political uncertainty to the mix could further push

(global) investors to look elsewhere," said ING analysts.

Britain's 10-year gilt yield was little changed

on the day at 4.936% although remained close to a three-decade

high.

TARIFFS

A U.S. trade court ruled Trump's latest 10% temporary global

duties are unjustified under a 1970s trade law. But analysts

expect a swift appeal and little overall impact on U.S. levies.

Treasury yields had tracked crude prices higher through

Thursday as traders worried about inflation, but did not move

much more on Friday with the benchmark 10-year yield

at 4.38%.

Bitcoin was drifting towards a sixth weekly gain in a

row at $79,680.