* Fed, ECB, BOJ, BOE to weigh in on economic outlook this

week

* Oil prices rise amid Iran-UAE tensions

* Fed expected to hold rates steady amid current oil

shock

(Updates with close of European markets)

By Chuck Mikolajczak

NEW YORK, March 17 (Reuters) - Global stocks rose on

Tuesday for a second straight session, even as the war in Iran

continued to drive up oil prices and ahead of a flurry of policy

announcements from global central banks this week.

Israel said it had killed Iran's security chief, while a

senior Iranian official said the new supreme leader had rejected

de-escalation offers conveyed by intermediaries.

President Donald Trump told reporters the U.S. was not ready

to leave the military operation in Iran yet, but that "we'll be

leaving in pretty much the very near future".

U.S. crude rose 2.28% to $95.63 a barrel and Brent

climbed 2.59% to $102.81 per barrel, supported by

Iranian attacks on the United Arab Emirates that kept supply

fears intact while the Strait of Hormuz remains largely shut.

Both contracts were off earlier gains of about 5%, but remain up

more than 40% for the month.

MAJOR S&P SECTORS ADVANCE

On Wall Street, U.S. stocks were higher, led by a 1.4% rise

in the S&P 500 energy index. Despite rising fuel costs,

airline and travel stocks also advanced after Delta Air

and American Airlines ( AAL ) flagged strong spring demand.

"The consumer and market are not as worried about inflation

right now as they were maybe a week ago. I think we're starting

to see the forest through the trees where this war is not going

to last forever," said Dennis Dick, founder at Triple D Trading.

The Dow Jones Industrial Average rose 137.81 points,

or 0.29%, to 47,083.55, the S&P 500 gained 27.45 points,

or 0.40%, to 6,726.24 and the Nasdaq Composite climbed

119.96 points, or 0.53%, to 22,493.75.

MSCI's gauge of stocks across the globe rose

6.47 points, or 0.63%, to 1,014.53 and was on track for its

first back-to-back daily gains in three weeks, while the

pan-European STOXX 600 closed up 0.67%, buoyed by

energy and utilities stocks.

Stocks have struggled since the war in Iran started. HSBC

global equity strategist Alastair Pinder said in a note that

while "talk of a shift toward stagflation is building" the

recent action in equity markets "is more indicative of trading

for a recessionary outcome."

The jump in oil prices and its potential to boost inflation

have prompted markets to adjust expectations for easing by

global central banks this year.

Markets are pricing in about 27 basis points of cuts from

the U.S. Federal Reserve by year-end, down from more than 50

basis points earlier this week, and roughly 35 basis points of

hikes from the European Central Bank after pricing in a modest

chance of a cut as recently as February, according to LSEG data.

While investors were largely not pricing in any cuts from

the Fed at Wednesday's policy announcement, the timing of any

future reductions has been pushed further out this year.

Operations at the UAE's Shah gas field remained suspended on

Tuesday, while a new attack caused a fire in the key oil export

terminal of Fujairah, highlighting how Iran is disrupting energy

flows from the region.

Stock markets rallied on Monday as oil prices dipped on

hopes shipping flows from the Gulf would improve and optimism

about artificial intelligence lifted U.S. tech companies.

CENTRAL BANKS GRAPPLE WITH ENERGY PRICES

The Reserve Bank of Australia voted on Tuesday to hike

interest rates for a second straight month, taking its benchmark

rate to 4.1% and warning of a material inflation risk from the

Middle East war.

Goldman Sachs analysts said the risk of a third straight

hike is "material" but not their base case.

The move set the tone ahead of policy statements this week

from central banks in the U.S., Britain, euro zone, Japan,

Canada, Switzerland and Sweden, all of which will meet for the

first time since the start of the Iran war. Investors will look

for clues on how higher crude prices could influence the rate

outlook.

The Fed is widely expected to hold rates steady, and

policymakers are likely to strike a cautious, if not hawkish,

tone due to the current oil shock.

The shifts in central bank expectations have led to large

moves in government bonds, although that market was subdued on

Tuesday.

The yield on benchmark U.S. 10-year notes fell

2.2 basis points to 4.198% but is up about 24 basis points for

March. The two-year note yield, which typically moves

in step with Fed rate expectations, fell 1.5 basis points to

3.665% but is up nearly 29 basis points for the month.

The dollar index, which measures the greenback

against a basket of currencies, shed 0.3% to 99.56, with the

euro up 0.31% at $1.1539.

Against the Japanese yen, the dollar weakened 0.06%

to 158.97, just below the key 160 level that has previously

triggered interventions by the Bank of Japan, despite verbal

warnings from Japanese authorities on Tuesday.