(Updates to afternoon U.S. trading)

* Oil prices surge; stocks in the red

* Bond yields climb

* Euro under pressure versus dollar

By Lawrence Delevingne and Niket Nishant

BOSTON/LONDON, March 12 (Reuters) - Global shares fell

on Thursday as attacks on oil tankers in the Gulf and

warnings from Iran shattered prospects of an imminent

de-escalation in the Middle East conflict, pushing oil prices to

around $100 a barrel and stoking fresh inflation concerns.

Wall Street's stock indexes slumped, dragged down by rising

oil prices and concerns about the private credit market. The Dow

Jones Industrial Average and the S&P 500 dropped

about 1.2%, and the Nasdaq Composite lost 1.4%.

The STOXX 600 pan-European equity benchmark slipped

0.66%. The MSCI All-World index fell 1.2%.

Brent crude futures jumped as much as 10.4% to

$101.59 a barrel, before trimming gains, as doubts persisted

over whether reserve releases would be enough to cushion the hit

from the Middle East supply shock.

U.S. crude futures were last trading 8.7% higher at

$94.85 a barrel, and Brent last stood just under $100 a barrel.

Monica Guerra, head of U.S. policy at Morgan Stanley Wealth

Management, said in a report Thursday that geopolitically driven

equity volatility is historically short-lived. But, if higher

oil prices persist, "the Fed's reaction function could be

complicated, supporting a higher fed funds rate for longer."

IRAN WARNS OF MORE ATTACKS AS STRIKES ON TANKERS CONTINUE

Iran will avenge the blood of its martyrs, keep the Strait

of Hormuz closed and attack U.S. bases, new Supreme Leader

Mojtaba Khamenei said on Thursday in a statement read out on

state television, his first remarks since succeeding his slain

father.

Earlier, two fuel tankers in Iraqi waters were struck by

explosive-laden Iranian boats, Iraqi security officials said,

while an Iraqi official told state media that its oil ports

"have completely stopped operations."

"The market remains very concerned in terms of what's going

on in the Strait of Hormuz, and basically, information that we

are getting over the last 24 hours is not a good reading," said

Rodrigo Catril, a senior FX strategist at NAB.

Iran had earlier stepped up attacks on merchant ships in the

Strait of Hormuz, increasing the number of ships struck in the

region since fighting began to at least 16. Tehran has warned

the world to get ready for oil at $200 a barrel, although U.S.

Energy Secretary Chris Wright said on Thursday global oil prices

are unlikely to hit that price.

INFLATION RISKS

Data on Wednesday showed the U.S. consumer price index rose

0.3% in February, in line with forecasts and above January's

0.2% increase. The report was not regarded as particularly

relevant given the Iran war has started to fuel inflation.

In bond markets, the risk of rising inflation outweighed

safe-haven considerations to push yields higher globally. Yields

on 10-year Treasury notes rose 4.3 basis points to

4.249%, having jumped 7 bps overnight.

Also worrying markets was the $2 trillion private credit

market after Swiss private equity firm Partners Group warned

default rates could double in the next few years.

Morgan Stanley ( MS ) fell 4% after limiting redemptions at

one of its private credit funds following similar actions by

Blackstone and BlackRock ( BLK ) earlier this month.

Blackstone and BlackRock ( BLK ) were down 3.8% and 2.3% respectively.

The U.S. Federal Reserve will cut interest rates for the

first time this year in June, according to economists polled by

Reuters. Nearly 40% expect just the one rate reduction or none

this year, almost double the share predicting three or more.

Nervous investors sought the liquidity of dollars while

shunning currencies from countries that are net energy

importers, including Japan and much of Europe.

The euro slipped 0.4% to $1.1520. The dollar was

slightly stronger at 159.21 yen.