(Updates for European morning trading)

* STOXX 600 skids, S&P futures down ahead of Nvidia ( NVDA )

results

* Oil prices gain on reports of drone attacks in Gulf

* Mounting inflation concerns keep bonds on the ropes

By Wayne Cole and Samuel Indyk

LONDON, May 18 (Reuters) - Global share markets slipped

on Monday as fresh drone attacks in the Gulf shoved oil prices

and bond yields higher, stoking inflation worries in a week when

the tech bull run will be tested by earnings from Nvidia ( NVDA ).

A drone strike caused a fire at a nuclear power plant in the

United Arab Emirates, while Saudi Arabia reported intercepting

three drones, as U.S. President Donald Trump warned that Iran

must act "fast" to reach a deal.

Meanwhile, the vital Strait of Hormuz remains closed to all

but a trickle of shipping as Tehran tries to formalise its

control of the waterway that during normal times carries 20% of

the world's oil and gas trade.

"Right now, markets are panicking as they are pricing the

possibility that the Strait of Hormuz remains closed," said

George Lagarias, chief economist at Forvis Mazars.

Brent was trading up 1% at about $110.50 a barrel,

while U.S. crude climbed 1.2% to $106.72 a barrel.

Crucially, futures for September climbed above $100 and December

hit a contract high as markets braced for protracted shortages.

G7 finance ministers are scheduled to gather in Paris on

Monday to discuss the Strait of Hormuz and critical raw material

supplies, though geopolitical differences threaten to test the

group's cohesion.

Global bond markets were hit again on Monday by concerns

that energy costs would stay high and thus continue to drive

inflation.

Yields on U.S. 10-year notes hit a 15-month top

of 4.631%, having surged 23 basis points last week. Yields on

30-year bonds reached 5.159% after jumping 18 basis

points last week.

Japan's 10-year yield hit a peak not seen since 1996 as the

government proposed to issue fresh debt to fund a planned extra

budget to cushion the economic blow from the Iran war. Germany's

10-year bond yield rose to a level not seen in 15

years.

"As long as this is not a credit event, and we have no

evidence to call this a credit event, then beyond the normal

volatility seen for a market at all-time highs, I would be

surprised if it causes a big rout in equities as well," Forvis

Mazars' Lagarias said.

"It can be an excuse for some investors to take some money

off the table, but I'd be surprised if we saw a proper

correction on the back of this bond volatility."

STOCKS SKID

European stocks fell 0.5%, with major markets in

Frankfurt, Paris and London flat to

down 1.1%.

Overnight, Japan's Nikkei eased 1%, having fallen 2%

last week from record highs. South Korean stocks rose

0.3%, as Samsung Electronics ( SSNLF ) gained almost 4% after

a court issued a partial injunction against a union strike.

MSCI's broadest index of Asia-Pacific shares outside Japan

lost 0.7%. Chinese blue chips lost

0.6%, as economic data disappointed. China's April retail sales

edged up 0.2% when analysts had looked for growth of 2.0%, while

industrial output rose a sluggish 4.1%.

S&P 500 futures fell 0.4% and Nasdaq futures

lost 0.2%.

AI, RETAIL EARNINGS TO TEST THE BULL RUN

Rising yields push up borrowing costs and mean a higher

discount for future company earnings, challenging stock

valuations.

The AI trade will be tested by earnings from Nvidia ( NVDA )

that are due on Wednesday, with expectations sky-high for the

world's most valuable company.

Nvidia ( NVDA ) shares are up 36% since a March low, while the

Philadelphia SE semiconductor index has surged more than

60%, amid voracious demand for chips as tech companies spend

massively to build AI-related infrastructure.

Also due this week are results from a host of retailers led

by Walmart ( WMT ), which will provide an insight into how

consumers are faring with high energy prices.

In forex markets, risk aversion has tended to benefit the

greenback as the world's most liquid currency. The U.S. is also

a net energy exporter, giving it a relative advantage over

Europe and much of Asia.

The euro was little changed at $1.1630 after losing

1.4% last week. The pound was steady at $1.3353, having

dived 2.3% last week as political instability in Britain added

to already intense pressure on the gilt market.

The dollar held firm against the yen at 158.91,

with only the threat of Japanese intervention preventing another

speculative assault on the 160.00 chart barrier.

In commodity markets, gold was near flat at $4,544 an ounce

, having drawn little support so far as a safe haven or as

a hedge against inflation risks.