* Nikkei futures slide, S&P futures extend fall

* Brent crude up 60% in March, biggest monthly rise ever

* Gulf peace talks uncertain as US builds up troops

(Adds Trump comments in FT report, Asian share indices)

By Wayne Cole

SYDNEY, March 30 (Reuters) - Stock markets slumped in

Asia on Monday as investors dug in for a protracted Gulf

conflict that already has oil prices heading for a record

monthly rise, bringing a spike in inflation and the risk of

recession to much of the globe.

The Financial Times on Sunday quoted President Donald Trump

saying the U.S. could seize Kharg Island in the Persian Gulf,

from where Iran exports much of its oil, but also that a

ceasefire could come quickly.

Pakistan said it was preparing to host "meaningful talks" to

end the conflict over Iran in coming days even though Tehran

earlier accused Washington of preparing a land assault as the

U.S. military sends more troops to the region.

Yemen's Iran-aligned Houthis also launched their first

attacks on Israel since the start of the conflict.

"Iran's control of the Strait of Hormuz, capacity to disrupt

global energy and food markets, and sustained missile and drone

capabilities give it little incentive to concede, pressuring the

U.S. to escalate," said Madison Cartwright, senior geo-economics

analyst at Commonwealth Bank of Australia.

"We expect the war to run at least into June, with the risk

tilted to a longer conflict."

The clampdown on the Strait has sent prices for oil, gas,

fertiliser, plastic and aluminium surging, along with fuel for

planes and shipping. Prices for food, pharmaceuticals and

petrochemical products are all set to rise.

That is bad news for Asia, as much of the region is highly

dependent on energy from the Middle East. Japan's Nikkei

shed another 4.7%, bringing losses for March to almost 14%.

South Korea's market fell 4.2%, while MSCI's

broadest index of Asia-Pacific shares outside Japan

dropped 1.2%.

S&P 500 futures lost 0.7%, while Nasdaq futures

fell 0.9%. For Europe, EUROSTOXX 50 futures and

DAX futures both slid 1.5%, while FTSE futures

fell 1.0%.

Brent crude rose 3.0% to $115.98 a barrel, bringing

its gains for the month to 60% and topping the jump that

followed Iraq's invasion of Kuwait in 1990. U.S. crude

climbed 3.0% to $102.52, making a monthly rise of 53%.

"The longer the Strait remains closed, the sharper the

drawdown in buffer supplies that could spark dramatic increases

in the price of crude oil, natural gas and other commodities,"

warned Bruce Kasman, global head of economics at JPMorgan.

"A scenario in which the Strait remains closed for an

additional month would be consistent with oil prices rising

towards $150/bbl and constraints on industrial consumers of

energy supply."

FED IN FOCUS AS PAYROLLS LOOM

The inflationary threat has led investors to revise up the

outlook for interest rates almost everywhere. Markets now imply

12 basis points of tightening by the Federal Reserve this year,

compared with 50 basis points of cuts a month ago.

Fed Chair Jerome Powell will have a chance to air his own

views at an event later on Monday, and the influential head of

the New York Fed, John Williams, is also talking.

Data on U.S. retail sales, manufacturing and payrolls this

week will provide an update on how the economy is travelling.

Jobs are seen rising 55,000 in March, after February's shock

92,000 drop, keeping unemployment at 4.4%.

In the European Union, figures on Tuesday are forecast to

show annual inflation leaped to 2.7% in March from 1.9% the

month before, though core prices should be steadier.

The energy shock, combined with pressure on fiscal budgets

from higher borrowing costs and the need for more defence

spending, has slugged sovereign bond markets.

Ten-year U.S. Treasury yields are up roughly

47 basis points for the month so far at 4.428%, while two-year

yields have climbed 54 basis points.

Heightened volatility in markets has tended to benefit the

U.S. dollar as the world's most liquid currency. The United

States is also a net energy exporter, giving it a relative

advantage over Europe and much of Asia.

The dollar was holding at 160.12 yen, having last

week crossed the 160 barrier for the first time since July 2024

when Japan last intervened to prop up the currency.

The euro was stuck at $1.1500, not far from the

March trough of $1.1409.

In commodity markets, gold was down 1.0% at $4,445 an ounce

, having drawn scant support as a safe haven or as a hedge

against inflation risks.

(Reporting by Wayne Cole; Editing by Edmund Klamann and

Muralikumar Anantharaman)