(Updates prices throughout, adds Wall Street futures in

paragraph 4 and update about war in 7)

* European stocks up after previous session's losses

* Oil prices stay elevated as Iran war disrupts supply,

IEA warns of shortfall

* Market focus shifts to Trump-Xi meeting later in week

By Elizabeth Howcroft

PARIS, May 13 (Reuters) - European stocks rose on

Wednesday and Wall Street was set to open higher as markets

rebounded from the previous session's losses, although bond

yields remained elevated as hopes dwindled for a peace deal

between the U.S. and Iran.

Wall Street stocks fell from recent record highs on Tuesday,

after U.S. inflation data showed consumer prices rose the most

in three years, driven by an increase in energy-related costs.

The data highlighted the economic fallout from the U.S. and

Israel's war on Iran, and pushed government bond yields up as

traders saw it as increasing the chances that central banks will

be forced to raise rates sooner than expected.

Market sentiment took a hit in Asian trade, but some signs

of a recovery had emerged by 1102 GMT, with Europe's STOXX 600

up 0.3%. London's FTSE 100 was little changed.

Wall Street futures pointed to gains for U.S. stocks, with

Nasdaq e-minis up 0.7%.

Still, the 10-year U.S. Treasury yield was at 4.4629%, after

hitting its highest since late March. Japan's 5-year

and 20-year government bond yields hit new record highs

overnight.

Oil prices were little changed, with Brent crude up

0.2% at $108.03 a barrel and West Texas Intermediate down

0.1% at $102.11 a barrel.

The International Energy Agency said global oil supply will

fall short of demand this year, as the war wreaks havoc on

Middle East oil production. The two sides have made no progress

on an agreement to end hostilities and Israel has escalated its

attacks in Gaza in the last five weeks.

Markets were in "wait-and-see" mode as attention turns to

U.S. President Donald Trump's summit with Chinese counterpart Xi

Jinping in Beijing later this week, said Amelie Derambure,

senior multi-asset portfolio manager at Amundi in Paris.

"The preferred scenario for the market would be if China can

influence the ceasefire or the peace in Iran but it's considered

relatively unlikely," she said.

"This would be a positive surprise rather than the main

scenario for markets at the moment."

On Tuesday, Trump said he did not think he would need

China's help to end the war.

Some ships have been able to pass through the Strait of

Hormuz, and Reuters reported on Tuesday that both Iraq and

Pakistan have cut deals with Iran to ship oil and liquefied

natural gas from the Gulf, demonstrating Iran's ability to

control energy flows through the strait.

Derambure said investors now expect the strait to open

during the summer, but the market was "digesting the idea that

the closure could last longer than was expected last week".

The surge in energy prices has helped corporate earnings in

Europe and the U.S., but strained consumers.

U.S. earnings have also been driven higher by technology

companies' spending on investments related to artificial

intelligence.

"There is still this belief that equities - except in a

recession but that's on no one's radar for the moment - are

better positioned to resist, or to perform decently, in this

higher-inflation stronger-nominal-growth environment," Derambure

added.

In Britain, gilt yields surged as Prime Minister Keir

Starmer's grip on power weakened. The 10-year yield was at

5.093%.

The dollar index was at 98.496, up 0.2% on the day

and the euro was down 0.2% at $1.1711.

The Japanese yen was at 157.82 versus the U.S. dollar

, having briefly spiked Tuesday on "rate check"

speculation, often seen as a precursor to intervention.

Gold prices were down 0.4% at about $4,692 an ounce.