(Updates asset prices in US morning trade)

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Fifth day of Iran/Israel fighting keeps investors on edge

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Trump says he wants a "real end" to dispute

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Crude prices climb as much as 2%, gold rises

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Fed expected to hold rates, Chair's comments in focus

By Isla Binnie and Amanda Cooper

NEW YORK/LONDON, June 17 (Reuters) -

Wall Street opened slightly lower while oil and gold rose as

Tuesday marked the fifth day of fighting between Israel and

Iran, with the risk of a widening conflict dampening risk

appetite in a week also packed with key central bank decisions.

U.S. President Donald Trump urged everyone to evacuate

Tehran, cut short his visit to the Group of Seven summit in

Canada, and said he wanted a "real end" to the nuclear dispute.

Israeli Defence Minister Israel Katz said Iran's leader could

face the same fate as deposed Iraqi President Saddam Hussein.

With tensions running high, the Dow Jones Industrial Average

fell 0.19%, the S&P 500 fell 0.26%, and the Nasdaq

Composite fell 0.36%, following global counterparts

lower.

U.S. crude rose 2.26% to $73.39 a barrel and Brent

rose to $75.09 per barrel, up 2.54% on the day.

Further raising the stakes, the BOJ, Federal Reserve, Bank

of England and Swiss National Bank all meet this week.

"Investors are trying to take all this on board. It is very

difficult at the moment, I think. And there's an understandable

degree of nervousness. Should I really be holding on to these

stocks now at these levels?" Chris Beauchamp, chief market

analyst at IG, said.

"Once the central bank parade is out of the way, then we

might get a better sense of where they view things."

Traditional safe-haven assets benefited from the risk-off

mood. U.S. Treasuries rose, pushing yields 1.8 basis points

lower on the 10-year and 1.6 basis points lower on the 30-year

notes. Gold prices edged up 0.14%.

Stocks in Europe sagged, leaving the STOXX 600 down

almost 1% on the day and around its lowest in three weeks, while

German government bond yields held steady.

No disruptions to crude supply have been reported yet,

although news of a collision between two ships in the Gulf of

Oman sent another brief jolt through the oil market overnight.

Analysts said volatility levels in financial markets do not

appear to reflect the geopolitical tensions.

The VIX volatility index has risen in the last week,

but at around 20.8 is well below April's highs above 60 and

nowhere near the records, above 80, hit during the 2008

financial crisis.

"This is happening at a point in time where we are less

sensitive, first of all the fact being that oil prices are still

down year to date, and secondly the macro economy is ... showing

that financial markets are relatively resilient at the moment,"

Bjarne Breinholt Thomsen, head of cross asset strategy at Danske

Bank, said in a webinar on Tuesday.

FOCUS ON THE FED

The Federal Reserve is expected to keep rates unchanged on

Wednesday, but market participants will be closely following

comments from Chair Jerome Powell, who Trump has repeatedly

criticised for not lowering interest rates.

"One thing that settled the markets earlier this year

was the independence of the Fed and the fact they would not be

influenced, but data-driven," said Matt Rubin, Chief Investment

Officer at Richmond, Virginia-based Cary Street Partners.

"Jerome Powell is going to continue to express that they

are focused on data at this point, and that data does not

warrant a cut."

Policymakers will release new projections for interest

rates, which investors will assess to get a sense of how the

committee believes the Trump administration's tariffs could

affect growth and inflation.

Traders are pricing in two cuts by the end of the year.

Tariff negotiations between Japan and the United States on

the sidelines of the G7 summit fell short of a breakthrough,

while a deal with Britain left unresolved the issue of steel and

aluminium duties.

The Bank of Japan, the first major central bank to decide on

monetary policy this week, left short-term interest rates

unchanged at 0.5% as expected. The central bank said it would

slow the pace at which it is unwinding its massive holdings of

government bonds to avoid disrupting the market.

Weak demand for Japanese government bonds (JGBs) at recent

auctions, along with concern about the country's finances, sent

longer-dated borrowing costs spiralling to record highs last

month.

The yen weakened 0.12% against the dollar to 144.91.

(Additional reporting by Lucy Raitano in London and Johann M

Cherian and Ankur Banerjee in Singapore; Editing by Kim Coghill,

Bernadette Baum, David Evans and Deepa Babington)