(Updated at 2:30 p.m. ET (1830 GMT)

* Global equities gain on hopes of an end to Iran

conflict

* STOXX 600 rises on day, still set for worst month since

2022

* Euro zone inflation rises on oil shock, data shows

By Chris Prentice and Elizabeth Howcroft

NEW YORK/PARIS, March 31 (Reuters) - Global equity and

bond markets jumped on Tuesday on speculation of a potential

de-escalation in the Middle East conflict that has driven the

biggest one-month increase in global oil prices in history.

Despite the rally, financial assets suffered through a

gloomy month on fears of rising inflation and stagnant growth.

The surge in oil prices on the back of the worst energy supply

interruption ever has sent investors to the exits in both the

bond and stock markets throughout March.

Europe's benchmark STOXX 600 index fell 8% in

March, logging its steepest monthly decline in nearly four years

and ending an eight-month string of gains.

Tuesday's rebound was driven by unconfirmed reports that

Iran's president - who has less power than the country's supreme

leader - said the country was ready to end the month-long

war. Global stocks were also boosted by an earlier Wall Street

Journal report that Trump had told aides he is willing to end

the military campaign even if the crucial Strait of Hormuz

remains largely closed.

However, Trump has contradicted his own message at times, as he

also warned that the U.S. would "obliterate" Iran's energy

plants and oil wells if it does not open the strait, which is

used to transit roughly one-fifth of the world's oil and gas.

Equity markets are "taking the U.S. administration at their

word, that they're going to end the war," said Colin Graham,

head of multi-asset strategies at Dutch asset manager Robeco.

"They haven't moved to day two, where the Strait of Hormuz

could still be closed."

Front-month Brent crude futures held above $110 a barrel

after Iran attackedand set ablaze a fully loaded oil tanker off

Dubai early on Tuesday. Brent rose nearly 5% to $118.38 a barrel

, on track for its biggest monthly gain on record ahead

of the contract's expiry.

The next-month Brent contract, however, was down

2.5% to $104.65 a barrel. U.S. crude fell 63 cents to

$102.26 a barrel.

The average U.S. retail price of gasoline hit $4 a gallon on

Monday.

THE WAR'S GLOBAL REACH

The war, which began with the U.S. and Israel launching

coordinated strikes against Iran in late February, has sent

shockwaves across global markets and raised the risk of a

worldwide recession.

MSCI's gauge of stocks across the globe

rose 16.72 points, or 1.7%, to 977.59. For the month, the index

has lost about 9%.

On Wall Street, the Dow Jones Industrial Average

rose 2.2% to 46,203.56, the S&P 500 added 2.5% to

6,502.69 and the Nasdaq Composite jumped 3.5% to

21,513.34.

Still, the S&P 500 and the Dow were on track for their biggest

monthly decline in nearly four years, down 5.3% and 7.7%,

respectively.

"What we've seen from a messaging standpoint from the

administration is a bit of indication they may start to either

wind down or pivot," said Alonso Munoz, chief investment officer

at Hamilton Capital Partners.

"You get these periods where the market gets so oversold

that you just have relief rallies on any indication that there's

good news."

The pan-European STOXX 600 index rose 0.41%, and

Europe's broad FTSEurofirst 300 index gained 0.40%.

U.S. job openings, a measure of labor demand, fell more

than expected in February and hiring dropped to the lowest level

in nearly six years, government data showed on Tuesday.

INFLATION AND GROWTH FEARS

The oil shock pushed euro zone inflation above the European

Central Bank's 2% target in March.

Government bond yields had retreated from multi-year highs at

the start of the week after rising sharply this month because of

the conflict, with investors appearing to refocus on the risk of

weaker growth stemming from the energy shock.

U.S. Treasury prices rallied, sending yields lower, after a

month of heavy selling, as the de-escalation hopes boosted

demand for government debt.

The German two-year yield fell 4.8 basis points

to 2.574%.

The European Union's energy chief has told governments to

prepare for "prolonged disruption" to energy markets as a result

of the war, ahead of an emergency meeting on Tuesday.

"If the Strait of Hormuz remains closed for the next week or

two, then I think we'll be raising our probabilities of

recession in our scenario analysis," Robeco's Graham said,

adding that this was not yet the case.

The U.S. dollar fell, but remained on course for a monthly

gain.

The Japanese yen rose 0.57% against the greenback to

158.82 per dollar.

Japan's finance minister said that the government was ready to

respond "on all fronts" against foreign exchange volatility,

underscoring Tokyo's alarm over the yen's recent slide.

Spot gold rose 2.25% to $4,612.60 an ounce but was

still poised to end the month down over 10%. U.S. gold futures

settled 2.7% higher at $4,678.60.