*

Oil dips after initial rise, Brent at $73.85 a barrel

*

China retail data beat forecasts, factory output in line

*

Asia, European shares and U.S. futures nudge up

*

Busy central bank week ahead, eyes on Middle East

*

Dollar steadies, gold dips

(Updates after morning European trading)

By Wayne Cole and Alun John

SYDNEY/LONDON, June 16 (Reuters) - World shares nudged

up on Monday, with oil prices steadier but holding on to most of

last week's increase, as the conflict between Israel and Iran

added further uncertainty to the world's economic troubles in a

week packed with central bank meetings.

The escalation in the Middle East came just as Group of

Seven leaders were gathering in Canada, with U.S. President

Donald Trump's tariffs already straining ties.

Yet there was no sign of panic among investors as currency

markets stayed calm and Wall Street stock futures firmed after

an early dip.

Brent was last off 0.5% at $73.85 a barrel,, but

last week's 13% surge means its inflationary pulse, if

sustained, could make the Federal Reserve more nervous about

giving too many hints at its Wednesday meeting about interest

rate cuts later in the year.

Markets are still wagering on two easings by December, with

a first move in September seen as most likely.

"The key is how much flexibility the Fed thinks it has,

we've been pleasantly surprised we've not yet seen in

inflationary pass-through from the tariffs," said Ben Laidler,

head of equity strategy at Bradesco BBI.

"The situation in the Middle East is the major issue of the

day. The message from the market is that it isn't too afraid,

but it does turn what was already going to be a busy week into a

frenetic one, and that has a lot of people on the sidelines."

Data on U.S. retail sales on Tuesday will also be a hurdle,

as a pullback in autos could drag the headline down even as core

sales edge higher. A market holiday on Thursday means weekly

jobless claims figures are out on Wednesday.

For now, investors were waiting on developments and MSCI's

all-country world share index gained 0.2%, to sit a touch below

last week's record high.

Europe's STOXX 600 rose 0.3% and S&P 500 futures

rose 0.5%.

Earlier in the day, Chinese blue chips added

0.24%, and Hong Kong gained 0.7% as data showed Chinese

retail sales rose 6.4% in May to handily top forecasts, while

industrial output was in line with expectations.

EXPOSED TO OIL

In currency markets, the dollar gave back of some of last

Friday's gains against European currencies - the euro was up

0.3% at $1.1582 - and held steady on the Japanese yen

at 144.10.

The spike in oil prices is a negative for the yen and euro

at the margin as both Japan and the EU are major importers of

energy, while the United States is an exporter.

Currencies from oil exporters Norway and Canada both

benefited, with the Norwegian crown hitting its highest

since early 2023.

"We should expect that economies with a positive energy

trade balance should see their currencies benefiting from the

shock to oil prices," noted analysts at Deutsche Bank.

"It's notable the dollar is in this category, highlighting

how the U.S. has moved from a net energy-importer to a net

exporter in recent years."

Central banks in Norway and Sweden meet this week, with the

latter thought likely to trim rates.

The Swiss National Bank meets on Thursday and is considered

certain to cut by at least a quarter point to take rates to

zero, with some chance it may go negative given the strength of

the Swiss franc.

The Bank of Japan holds a policy meeting on Tuesday and is

widely expected to hold rates at 0.5%, while leaving open the

possibility of tightening later in the year.

There is also speculation it could consider slowing the

rundown of its government bond holdings from next fiscal year.

Government bond yields nudged higher around the world. The

U.S. 10-year Treasury yield was last up 1 bp at 4.44%

Germany's 10-year Bund yield was up nearly 3 bps at

2.56%.

The calmer mood across markets saw some of gold's safe-haven

bid reverse and it was down 0.55% at $3,413 an ounce..