* Hopes of end to conflict evaporate after Trump speech

* Oil surges as stagflation risks swirl, denting risk

assets

* Stocks sharply lower as Trump speech provides little

clarity

By Chris Prentice and Marc Jones

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

U.S. bond yields spiked on Thursday, and global equity markets

gave back gains after remarks from U.S. President Donald Trump

dashed hopes of a swift resolution to the Middle East war.

Brent crude surged more than 7% to around $110 a

barrel after Trump said in a prime-time address on Wednesday

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 opened lower on the last trading day

of the week, with markets closed for the Good Friday holiday.

European shares also sank and Asian markets closed lower.

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 climbed 0.39%.

"Over the past 48 hours, Tehran and Washington have

exchanged a cacophony of statements, some suggesting rising odds

of de-escalation. At the same time, kinetic action has continued

unabated," 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 targets toward Israeli

ones."

WALL STREET POINTS LOWER, ASIA CLOBBERED

MSCI's gauge of stocks across the globe

fell 0.43% to 992.44.

On Wall Street, the Dow Jones Industrial Average fell

0.12% to 46,511.17, the S&P 500 eased 0.02% to 6,574.05

and the Nasdaq Composite lost 0.10% to 21,818.35.

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 fell 0.2%, while

Europe's broad FTSEurofirst 300 index fell 5.30 points,

or 0.22%.

Asian equities bore the brunt of the subsequent reaction

, with Japan's Nikkei closing down 2.4%

and South Korea's Kospi index sliding 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, referring to the narrow chokepoint

through which a fifth of global oil and liquefied natural gas is

shipped.

"Trump's speech doesn't imply this is likely to happen as

quickly as the markets were expecting."

Trump said on Wednesday the U.S. did not need the key oil

gateway and that it would open naturally once the conflict was

over.

Spot gold fell 1.48% and spot silver fell

3.17%.

There were growing signs of urgency in oil-importing

emerging markets.

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 rose to $106.43 per barrel, up 5.21%,

as U.S. West Texas Intermediate soared 8.43% to $108.56.

"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

2.8 basis points to 4.293%. The 2-year note yield,

which typically moves in step with interest rate expectations

for the Federal Reserve, fell 1.1 basis points to 3.792%.

Euro zone benchmark Bund yields snapped a three-day decline

and traders raised bets for interest-rate hikes.

German borrowing costs were still on track for their first

weekly decline since the start of the war. The 10-year

government bond yield fell 0.7 basis points to

2.989%.

(Additional reporting by Ankur Banerjee in Singapore. Editing

by Mark Potter and David Gregorio)