* Major brokerages see greater chance of hikes for BoE

and ECB this year

* Markets starting to price in potential for Fed hikes

* Oil prices remain choppy

(Updates with open of US markets)

By Chuck Mikolajczak

NEW YORK, March 20 (Reuters) - Global shares fell for a

third straight session and were poised for a third consecutive

weekly decline on Friday while bond yields rose on worries the

Iran war would keep upward pressure on oil prices and rekindle

inflation.

Iran attacked an oil refinery in Kuwait on Friday and Israel

killed a spokesman of Iran's Revolutionary Guards, while three

U.S. officials told Reuters that thousands of additional U.S.

troops will be deployed to 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.

On Wall Street, U.S. stocks were lower in the initial stages

of trading, with the S&P 500 energy index the best

performer of the 11 major S&P 500 sectors.

The Dow Jones Industrial Average fell 270.24 points,

or 0.59%, to 45,751.19, the S&P 500 stumbled 60.15

points, or 0.91%, to 6,546.48 and the Nasdaq Composite

tumbled 273.59 points, or 1.24%, to 21,817.10.

Global bond yields have also moved higher, after policy

announcements from multiple central banks this week indicated

that interest rates were likely to either be on hold, or could

potentially move higher should the war keep pressure on prices.

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

8.9 basis points to 4.372% and is poised for its third straight

weekly gain.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Fed, rose 9.5 basis

points to 3.928%, and was on pace for its largest three-session

jump since May as markets begin to price in the possibility of

rate hikes from the central bank this year.

"People are beginning to worry about inflation because of

oil prices, even though we as the U.S. are energy independent.

And so we're less affected than certainly than Asia and Europe

with respect to the Middle East but we're not immune to it,"

said Scott Welch, chief investment officer at Certuity in

Potomac, Maryland.

"People are starting to factor that into their inflation

perspectives, and that's driving yields up, so 4.25% to 4.5% is

probably where we'll be for a while on the 10-year."

MSCI's gauge of stocks across the globe fell

9.18 points, or 0.92%, to 985.98 and is down nearly 7% over the

past three weeks, its biggest drop in nearly a year, and the

pan-European STOXX 600 index dropped 1.14% and was also

on track for a third straight week of declines.

Major global brokerages see a higher likelihood of the European

Central Bank and Bank of England delivering rate hikes,

potentially as early as April, after policymakers warned that

the Middle East war is driving renewed inflation risks.

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

row, while the British 10-year gilt yield soared to

its highest since July 2008. It was last up 17 basis points to

5.018%.

Germany's two-year yield, which is up around 65 basis

points for the month, was last up 9.2 bps at 2.661%.

ENERGY CHOKEHOLD

U.S. crude rose 1.24% to $97.33 a barrel and Brent

advanced to $109.35 per barrel, up 0.64% in choppy

trade. Crude was lower earlier in the day after the U.S.

outlined moves to manage the oil supply crisis, while leading

European nations, Japan and Canada offered to join efforts to

secure safe passage for ships through the Strait of Hormuz.

Natural gas prices have also surged, 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.

DOLLAR FALLS FROM PEAK

The dollar index, which measures the greenback against a

basket of currencies, gained 0.42% to 99.70, with the euro

down 0.44% at $1.1537. The greenback was poised for its

first weekly decline in three.

Two Fed officials said the war and its impact on energy markets

were clouding the outlook for the economy and monetary policy,

as one policymaker laid out an outlook calling for notably more

interest rate cuts than most U.S. central bank officials

currently support.

Against the Japanese yen, the dollar strengthened

0.86% to 159.08, moving closer to the 160 mark that has prompted

intervention in the currency by Japanese officials.