(Updates prices to US morning trading)

* Investors hopeful after Israel request for Lebanon

peace talks

* Oil prices swing after Wednesday's steep slide

* Wall Street turns higher on latest Mid East peace

efforts

* European shares dipped after strongest day in 4 years

By Sinéad Carew and Marc Jones

NEW YORK/LONDON, April 9 (Reuters) - MSCI's ( MSCI ) global

equities gauge reversed course to turn higher on Thursday and

oil's rally eased after Israel indicated willingness for peace

talks with Lebanon, renewing hopes for the fragile Gulf truce.

The U.S. dollar added to losses and U.S. Treasury yields turned

lower after Israeli Prime Minister Benjamin Netanyahu said he

has given an instruction for Israel to begin peace talks with

Lebanon that would also include the disarming of Hezbollah,

which is linked to Iran.

Wall Street stocks turned from red to green after the statement

seemed to ease worries that Israel's actions in Lebanon would

torpedo U.S. President Donald Trump's truce with Iran. Earlier,

Israel had bombed Lebanon killing more than 250 people. This

was after Iran had indicated that Lebanon should be part of the

ceasefire.

The strikes and scant signs of opening the Strait of Hormuz by

Iran had sent oil prices sharply higher earlier in the day.

After earlier rising above $102, U.S. crude was up 3.43%

at $97.71 a barrel in early afternoon trading and Brent,

after rising earlier to $99.50 was trading at $95.50 per barrel,

up 0.8% on the day.

While Michael O'Rourke, chief market strategist at

JonesTrading in Stamford, Connecticut said that weekend peace

talks could bring some insight and promise, he noted that it

could "take a little while before investors have confidence in

the outlook for the war and where oil prices are going."

"You've had a major equity rally where the index is only

down a little more than a percent on the year. There's nothing

attractive about chasing this tape at these prices," he said.

On Wall Street at 12:18 p.m., the Dow Jones Industrial Average

was up 281.82 points, or 0.59%, to 48,191.74, the S&P 500

rose 42.46 points, or 0.63%, to 6,825.27 and the Nasdaq

Composite was 172.96 points, or 0.76%, higher at

22,807.95.

MSCI's ( MSCI ) gauge of stocks across the globe

rose 2.77 points, or 0.27%, to 1,033.82.

The pan-European STOXX 600 index closed down 0.15%.

Overnight in Asia, Japan's Nikkei fell 0.7% after

jumping more than 5% on Wednesday. South Korea dipped

1.6%, following a leap of 6.8% in the prior session and MSCI's ( MSCI )

broadest index of Asia-Pacific shares outside Japan

eased 0.7% after Wednesday's roughly 5% rally.

ASSETS TURN ON MID EAST HOPES

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

notes fell 2.2 basis points to 4.269%, from 4.291%

late on Wednesday while the 30-year bond yield fell

1 basis point to 4.8755%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

fell 4.4 basis points to 3.75%, from 3.794%.

In currencies, the dollar index, which measures the

greenback against a basket of currencies including the yen and

the euro, fell 0.37% to 98.69, with the euro up 0.43% at

$1.1712.

Against the Japanese yen, the dollar strengthened

0.09% to 158.72.

In precious metals markets, spot gold rose 1.63% to

$4,793.07 an ounce while spot silver was up 2.66% at

$76.09 an ounce.

With oil prices still sharply higher than pre-war levels,

inflation has been a major concern for investors, with March

U.S. Consumer Price Index (CPI) data due to be released on

Friday before the market open.

Thursday's data showed the PCE index of U.S. core prices for

February up 2.8% on an annual basis and 3% excluding the

volatile food and energy components. Both figures were in line

with economists' forecasts although a separate report showed

fourth-quarter U.S. economic growth of 0.5% versus estimates for

0.7%.