(Updates with U.S. morning trade)

* S&P 500, Nasdaq gain

* Oil prices steady as Hormuz constraints temper talks

optimism

* Investors hope for swift end to Iran war

* US dollar edges up

By Isla Binnie and Tom Wilson

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

stock benchmark S&P 500 followed world shares higher and

oil prices stayed well below $100 a barrel on Wednesday after

U.S. President Donald Trump said talks to end a war with Iran

could resume over the next two days.

The Strait of Hormuz, a crucial waterway for a fifth of

global oil and gas shipments, remains effectively shut, but the

prospect of talks between the United States and Iran resuming in

the coming days has helped shore up some investor confidence.

On Wall Street, the Dow Jones Industrial Average fell

0.43% to 48,329.22, the S&P 500 rose 0.35%, to 6,991.53

and the Nasdaq Composite rose 0.93% to 23,858.36.

"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."

The MSCI All-Country World Index rose 0.32%, to 1,057.95.

European shares had a rougher ride, falling 0.41%.

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."

Oil prices started the sessions broadly stable after steep

falls during Tuesday's session, as the continued closure of the

Strait of Hormuz countered optimism about peace talks.

A surprise draw on U.S. weekly crude storage pushed U.S.

crude up 1.33% to $92.44 a barrel, while Brent

rose to $95.37 per barrel, up 0.66% on the day.

Major bank earnings came in strong. Bank of America ( BAC )

shares rose 1.6% after the second-biggest U.S. lender reported

growth in first-quarter profit. Morgan Stanley ( MS ) climbed

4.4% after it also reported a jump in first-quarter profit.

DOLLAR EDGES HIGHER

The U.S. dollar rose slightly on Wednesday after falling for

seven straight sessions to levels not seen since the start of

the Iran war on February 28, as investors gauged the likelihood

that peace talks would resume shortly.

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

against six units, was 0.03% on the day to 98.11.

"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.

SOME SUPPORT FOR TREASURIES

Investor optimism over a swift cessation of hostilities has

also lent some support to U.S. Treasuries, which had suffered

recently on worries about inflation.

The two-year Treasury yield, which typically

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

moves on interest rates, rose 2.3 basis points to 3.774. The

10-year yield was up 2.5 basis points to 4.282%.

Disruptions to global energy markets from the Iran war have

had more of an economic effect for European markets than for 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 basis point to 3.04%, from 3.03% late on Tuesday.

The International Monetary Fund on Tuesday lowered its growth

outlook and warned that the global economy would teeter on the

brink of recession if the conflict worsens.