(Updates prices at 11:04 a.m ET/ 1504 GMT)

By Sinéad Carew and Yoruk Bahceli

Oct 1 (Reuters) - MSCI's global equities index was lower

on Tuesday while the dollar rose and Treasury yields fell while

oil futures rallied as investors reacted to the escalating

Middle East conflict with fears that Iran was planning an attack

on Israel.

A senior White House official said on Tuesday that the

United States has indications that Iran is preparing to

imminently launch a ballistic missile attack against Israel.

This was after Israel carried out two attacks on Beirut,

striking the southern suburbs of the Lebanese capital and the

city's southern entrance, according to two security sources.

"The situation in the Middle East continues to evolve

rapidly. With Iran and Lebanon being drawn into the Middle East

conflict more directly, reactions today are playing out in

higher crude and gold prices," Anthony Saglimbene, chief market

strategist, Ameriprise Financial.

"While rising geopolitical tensions create elevated market

uncertainty and anxiety over the near term, investors will

likely measure the longer-term impact of growing Middle East

conflict through potential impacts on oil supply."

Oil prices climbed sharply after the reports with U.S. crude

up 3.7% at $70.69 a barrel and Brent rising to

$74.22 per barrel, up 3.47% on the day.

Saglimbene noted that investors were also monitoring a

strike at U.S. East Coast and Gulf Coast ports, which is

expected to halt about half the nation's ocean shipping.

Dockworkers called a strike after a midnight deadline passed

with no sign of a new contract deal with port owners.

On Wall Street at 11:04 a.m. the Dow Jones Industrial

Average fell 262.25 points, or 0.62%, to 42,068.06, the

S&P 500 fell 63.70 points, or 1.11%, to 5,698.64 and the

Nasdaq Composite fell 324.99 points, or 1.78%, to

17,865.17.

MSCI's gauge of stocks across the globe fell

7.36 points, or 0.86%, to 844.42. In Europe, the STOXX 600

index fell 0.4%.

In foreign exchange markets, the Japanese yen and Swiss

franc, seen as safe haven currencies, both gained ground after

the reports about Iran. The dollar index was rising after

Federal Reserve Chair Jerome Powell pushed back on Monday

against bets on more supersized interest rate cuts.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

rose 0.46% to 101.21.

The euro was down 0.57% at $1.1071 while against the

Japanese yen, the dollar strengthened 0.08% to 143.73.

In Treasuries, the yield on benchmark U.S. 10-year notes

fell 8.4 basis points to 3.718%, from 3.802% late on

Monday. The 30-year bond yield fell 7.4 basis points

to 4.0592% from 4.133%.

The 2-year note yield, which typically moves in

step with interest rate expectations, fell 5.1 basis points to

3.6002%, from 3.651% late on Monday.

A closely watched part of the U.S. Treasury yield curve

measuring the gap between yields on two- and 10-year Treasury

notes, seen as an indicator of economic

expectations, was at a positive 11.5 basis points.

Overseas, euro zone inflation data helped bonds rally there

as it came in below the ECB's 2% target, boosting the case for

speedier rate cuts than traders have been betting on.

Precious metals, often seen as a safe haven asset, were in

demand on Tuesday.

Spot gold rose 0.94% to $2,659.25 an ounce. U.S. gold

futures rose 0.95% to $2,661.20 an ounce.