By Yoruk Bahceli

April 20 (Reuters) - Oil prices jumped, the U.S. dollar

rose and stock futures fell on Monday as investors dealt with

conflicting messages about the Iran war and news that the Strait

of Hormuz was closed again.

In early Asian trading Brent crude futures jumped

about 7% to $96.85 a barrel and S&P 500 futures fell

about 0.9%.

The euro was down 0.3% at $1.1735 and the yen

eased around 0.2% to 158.95 per dollar.

Iran rejected new peace talks with the United States, its

state news agency reported on Sunday, hours after U.S. President

Donald Trump said he was sending envoys for talks in Pakistan

and would launch new strikes on Iran unless it accepts his

terms.

Tensions also rose after the U.S. said it seized an Iranian

cargo ship that tried to run its blockade.

The dollar's rise took it from lows it hit on Friday when

Iran's announcement that it would open the strait sent stocks up

and oil prices tumbling.

"Although clearly the news on the Strait of Hormuz closing

again is not good, ships being attacked is not good, Trump again

with his threats towards Iranian infrastructure is not good, the

market is very much looking at this as a case of: when you boil

it down, the two sides are still talking," said Michael Brown,

senior research strategist at Pepperstone in London.

"From an equity perspective, I'd probably be saying we

unwind a decent chunk of the gains that we saw on Friday, which

in hindsight was the market getting a little bit ahead of

itself."

Iran's announcement that it would open the Strait had sent

stocks and bonds surging on Friday and oil prices down as

investors bet on an end to a seven-week war that shut the Strait

of Hormuz, a vital artery for global crude and gas shipments.

"Now that Hormuz is closed again after about 12 hours of

being open, you'd probably expect most of the move that we saw

on Friday (in bonds) to unwind," Brown said.

"If it is indeed firmed up that Iran aren't going to attend

(the talks), you're going to see a much more risk-averse

reaction than we're seeing now."

MARKETS RALLIED LAST WEEK

Wall Street indexes touched record highs on Friday

while bonds, which unlike stocks are still far from recovering

their losses since the war, surged as oil prices fell and

investors pared bets on rate hikes from the European Central

Bank and Bank of England.

U.S. stocks have been supported through the past week by

expectations of robust first-quarter earnings, the bulk of which

come this week.

The benchmark U.S. 10-year Treasury yield touched its lowest

since mid-March on Friday.

The dollar dropped as the shine came off safe-haven assets

late last week, driving the dollar index, which measures

the greenback against a basket of currencies including the yen

and the euro, to its lowest in seven weeks. It was 0.2% higher

early on Monday in Asian trading.

"The risk is that the market is getting ahead of itself ...

The 13-day rally in the Nasdaq is an extreme. The dollar index

has fallen for nine of the past 10 sessions," Marc Chandler of

Bannockburn Capital Markets said in a note on Sunday.