(writes through with afternoon prices)

* S&P 500 hits intraday record high

* Oil fluctuates as Reuters reports Iran offers Hormuz

proposal

* Investors hope for swift end to Iran war

* US dollar alternates between modest gains and losses

By Isla Binnie

NEW YORK, April 15 (Reuters) - Wall Street's stock

benchmark S&P 500 touched an intraday record high as

hopes for a cooling of U.S.-Iran tensions and strong earnings

expectations boosted risk appetite on Wednesday, and oil prices

fluctuated on news Iran could make allowances for ships around

the Strait of Hormuz.

U.S. President Donald Trump said the war he launched with

Israel was "close to over," but industry sources said transit

through the Strait of Hormuz, a crucial waterway for global oil

and gas shipments, is running at a fraction of its usual volume.

A source briefed by Tehran told Reuters Iran could consider

allowing ships to sail freely through the Omani side of the

strait if a deal was reached to prevent renewed conflict.

On Wall Street, the Dow Jones Industrial Average fell

0.25%to 48,416.28, the S&P 500 rose 0.65%, to 7,012.41

and the Nasdaq Composite rose 1.29%, to 23,942.88.

"Equity markets, especially in the United States, have

rallied back pretty aggressively, showing a decent amount of

confidence that this is probably over, or close to the end,"

said David Seif, chief economist for developed markets at

Nomura, referring to "the supply disruption that comes from

Hormuz being closed."

Trump told ABC News that talks with Iran to end the war would

soon resume and reach a deal, telling the world to watch out for

an "amazing two days."

In a Fox Business Network interview conducted on Tuesday and

broadcast Wednesday, he said, "I view it as very close to over."

Major banks reported rising profits, kicking off an earnings

season analysts expect to show growth across the S&P 500.

Bank of America ( BAC ) and Morgan Stanley both reported

strong first quarters, pushing their shares up 1.2% and 4.6%

respectively.

OIL TICKS HIGHER

Oil prices edged up following steep falls during the

previous session, as the stranglehold on the Strait of Hormuz

countered optimism about peace talks.

Energy consulting firm Gelber & Associates said a small but

increasing number of tankers were moving through the strait. The

market was "no longer pricing a full-scale outage, but still

holding a residual premium as flows recover unevenly rather than

snapping back to normal," the analysts said.

U.S. crude settled up 0.01% at $91.29 a barrel,

while Brent rose 0.15% to $94.93 per barrel.

The U.S. Energy Information Administration reported a

surprisingly large draw on U.S. weekly crude, supporting prices.

DOLLAR FLIP FLOPS

The U.S. dollar alternated between modest gains and losses and

was on track for its eighth straight session of declines.

The dollar index, which measures the U.S. currency

against six units, shed 0.01% to 98.06.

"Not only are we at the mercy of the headlines over the

conflict, but now the focus is going to be on economic

growth," said Juan Perez, senior director of trading at Monex

US.

TREASURIES SLIP

Continuing caution tied to the Middle East hostilities saw

U.S. Treasuries slip, reversing some of their recent gains.

The two-year Treasury yield, which typically moves in

step with expectations for the Federal Reserve's next moves on

interest rates, rose 1 basis point to 3.761%. The 10-year yield

was up 2.2 basis points to 4.278%.

Disruptions to global energy markets from the Iran war have had

more of an effect on European markets than on the United States,

which is a net energy exporter, Nomura's Seif said.

"If you look at what has happened to bond prices in the

U.S., Treasuries, versus in Europe, it hasn't been good for U.S.

bond prices but it has been arguably a lot less negative," Seif

said.

The yield on benchmark German 10-year Bunds rose 1.5

basis point to 3.045%, from 3.03% late on Tuesday.

(Additional reporting by Chuck Mikolajczak and Gertrude Chavez

in New York, Tom Wilson in London and Stella Qiu in Sydney;

Editing by Kevin Buckland, Kim Coghill, Nick Zieminski and

Janane Venkatraman)