(Updated at 4:30 p.m. ET (2030 GMT)

* Some Wall Street indexes turn higher in late trading

* Oil surges as stagflation risks swirl, denting risk

assets

* Stocks lower as Trump speech provides little clarity

By Chris Prentice and Marc Jones

NEW YORK/LONDON, April 2 (Reuters) - Oil prices surged

on Thursday and equities markets around the world were mixed in

volatile trade as traders weighed conflicting developments and

remarks related to the Iran war.

European shares trimmed losses, as some major Wall Street

indexes and U.S. bond prices clawed back gains on news that Iran

was drafting a protocol with Oman to monitor traffic in the

Strait of Hormuz.

But world oil prices surged nearly 8% and U.S. crude

soared more than 11% the day after U.S. President Donald Trump

said in a prime-time address that the U.S. would hit Iran

"extremely hard" in the coming weeks and "bring them back to the

Stone Ages where they belong."

On Wall Street, stocks ended mixed in a choppy last trading

day of the week ahead of the Good Friday holiday.

Gold prices fell as the U.S. dollar gained.

Government bond yields jumped on expectations that an

inflation spike would force central banks to raise interest

rates, or at least keep them on hold.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

climbed 0.44%.

"Over the past 48 hours, Tehran and Washington have

exchanged a cacophony of statements, some suggesting rising odds

of de-escalation," BCA Research's Felix-Antoine Vezina-Poirier

said. "Our GeoMacro strategists offer simple guidance for

weighing volatile headlines: Stick to the facts. First, shipping

through Hormuz has picked up over the past few days. Second,

Iran is deliberately shifting away from GCC (Gulf Cooperation

Council) targets toward Israeli ones."

WALL STREET POINTS LOWER

MSCI's gauge of stocks across the globe fell

0.35% to 993.18.

On Wall Street, the Dow Jones Industrial Average fell

0.13% to 46,504.67, the S&P 500 reversed course to gain

0.11% to 6,582.69 and the Nasdaq Composite added 0.18%

to 21,879.18.

In a closely watched address on Wednesday, Trump said U.S.

attacks on Iran would be intensified over the next two to three

weeks. That came just a day after he told Reuters the U.S. would

be "out of Iran pretty quickly."

The pan-European STOXX 600 index and Europe's broad

FTSEurofirst 300 index both lost 0.2%.

South Korea's Kospi index slid 4.7%.

"The only thing that really matters is whether the Strait of

Hormuz will open soon," said Prashant Newnaha, senior rates

strategist at TD Securities.

Trump earlier said on Wednesday the U.S. did not need the

key oil gateway.

Spot gold fell 1.85% to $4,669.05 an ounce and U.S.

gold futures settled down 2.8% at $4,679.70.

India's central bank moved to ban trading of so-called

non-deliverable forwards in an effort to halt the rupee's run of

record lows. The move sent the currency up 2%, although

analysts questioned how long the rebound would last.

Brent futures rallied to end up 7.78% at $109.03 a

barrel, as U.S. West Texas Intermediate settled up 11.41%

to $111.54.

"The fact that we can expect 2-3 more weeks of action, boots

on the ground were not ruled out (during Trump's TV address) and

that threats to hit infrastructure were reiterated, will put the

market back on the defensive," Pictet Asset Management's Jon

Withaar said.

The yield on benchmark U.S. 10-year notes fell

1.6 basis point to 4.305%. The two-year note yield,

which typically moves in step with interest rate expectations

for the Federal Reserve, was flat at 3.803%.

Euro zone benchmark Bund yields snapped a three-day decline

and traders raised bets for interest-rate hikes. The yield on

the benchmark German 10-year rose 0.1 basis points

to 2.996%.

(Additional reporting by Ankur Banerjee in Singapore. Editing

by Mark Potter, Will Dunham and David Gregorio)