(Updates pricing after European morning)

* Traders move to price in hikes for BoE and ECB this

year

* Fed seen leaving rates on hold

* Oil prices, shares remain choppy

By Sophie Kiderlin and Rae Wee

LONDON/SINGAPORE, March 20 (Reuters) - Global shares and

the dollar nudged higher on Friday but were set for weekly

losses while bonds remained under pressure as central banks

warned that the Iran war could reignite inflation.

Trading stayed choppy and nerves frayed, highlighting how

brittle investor confidence remains and how sensitive markets

are to news on conflict in the Middle East.

An Axios report on Friday said that the Trump administration

is considering plans to occupy or blockade Iran's Kharg Island

to pressure Iran to reopen the Strait of Hormuz.

In a choppy session Europe's cross-regional STOXX 600

was last 0.34% higher on the day, but on track for a

roughly 1.7% weekly decline, while the MSCI All-World index

was set to fall for the third consecutive week.

Nasdaq futures fell 0.56% and S&P 500 futures

dipped 0.39%, while MSCI's broadest index of Asia-Pacific shares

outside Japan fell 0.5% on Friday but still rose

a touch across the week.

Following a busy week of monetary policy meetings, the key

takeaway for investors has been the prospect of a more

aggressive policy tightening path.

"Clearly central banks have learned that it's very dangerous

to say that an energy shock is purely transitory," said Sandra

Horsfield, economist at Investec, while also noting the risk of

both direct and indirect effects.

"So hence we have a more hawkish-sounding reaction."

Traders are no longer expecting a Federal Reserve rate cut this

year, while chances for a rate hike from the Bank of

England and European Central Bank at their

respective next meetings rose. Sources said the ECB may need to

begin discussing rate increases in April and possibly tighten

policy in June.

"For the time being, though, sending a more hawkish message

seems a very sensible thing. But again, it's hawkish, but it's

not immediate action," Horsfield said.

Euro zone government bond yields rose for a third day in a

row on Friday, after a rout the day before, while the British

10-year gilt yield soared to its highest since

2008. It was last up 7.6 basis points to 4.93%.

Germany's two-year yield, which is up around 59 basis

points for the month, was last up 3.2 bps at 2.61%.

ENERGY CHOKEHOLD

Oil prices were also choppy on Friday, with Brent crude futures

last down 1.32% at $107.22 a barrel. Leading European

nations and Japan offered to join efforts to secure safe passage

for ships through the Strait of Hormuz and the U.S. outlined

moves to boost oil supply.

Natural gas prices have also soared, with those in Europe

skyrocketing as much as 35% on Thursday, as Iranian and Israeli

strikes hit some of the Middle East's most important gas

infrastructure.

That prompted U.S. President Donald Trump to tell Israel not to

repeat its attacks on Iranian natural gas infrastructure.

"Even if the U.S. leaves (the conflict), Israel might not

leave, and there may still be some strikes and Iran will

retaliate, maybe at a lower volume," said Alicia Garcia-Herrero,

chief Asia-Pacific economist ​at Natixis.

"But this means that the Gulf will still be under

pressure... so oil prices will not go back to $60, they will

maybe stay at $90, at least until the end of the year. So the

shock is already unavoidable."

DOLLAR FALLS FROM PEAK

The dollar was set for a weekly loss of 1.15% and was

last a touch higher as the Fed is now seen as the only major

central bank that is not expected to raise rates this year.

That kept the euro holding onto most of Thursday's 1.2%

gains to fetch $1.1575, while sterling dipped 0.22% to

$1.34, after a 1.3% rise the previous day.

The yen, which was on the cusp of 160 per dollar in the

previous session, last stood at 158.57.

The Japanese currency was also helped by some hawkish comments

from Bank of Japan Governor Kazuo Ueda on Thursday, after the

central bank held rates steady but maintained its bias for

tighter monetary policy.

In precious metals, spot gold was up close to 0.8% at

around $4,684 an ounce.