(Updates prices throughout, adds analyst comment)

* Stocks continue to slide as Trump fails to calm markets

* US Treasury yields hit highest since July as bonds fall

* Analyst: 'Words alone aren't cutting it right now'

By Chibuike Oguh and Harry Robertson

NEW YORK/LONDON, March 27 (Reuters) - Global stock

markets fell and oil prices rose on Friday, driven by lack of

progress in bringing an end to the four-week-old Middle East

conflict that is beginning to sap consumer and business

confidence.

The global equity market selloff has deepened in recent

days, as U.S. President Donald Trump's statements about

negotiations are increasingly viewed as less important than the

situation in the Gulf, where attacks persist and the crucial

Strait of Hormuz is still effectively blocked by Iran.

On Wall Street, all three main indexes were trading lower with

consumer discretionary, financial and technology shares driving

losses. Economists and businesses increasingly believe the

conflict's disruption to world oil supply will filter through to

inflation worldwide and drag on growth.

The Dow Jones Industrial Average fell 1.6%, the S&P

500 lost 1.6% and the Nasdaq Composite shed 2.1%.

The broad-market S&P has lost 9% from its record close in

January.

"Words alone aren't cutting it right now, with President

Trump's extension of the pause on Iran energy strikes failing to

lift the mood in any meaningful way," said Matt Britzman, senior

equity analyst at Hargreaves Lansdown. "Tangible evidence of

progress is what's needed."

Trump extended a deadline for Iran to reopen the Strait of

Hormuz, but Iran has given no direct indication that it was

ready to negotiate. The country's Islamic Revolutionary Guard

Corps reiterated it would continue to disrupt shipping through

the strait, which is used to ship roughly one-fifth of the

world's oil and gas supply.

Brent crude futures rose 4.2% to $112.57 a barrel. U.S.

West Texas Intermediate futures settled up 5.4% at

$99.64.

"The longer the Strait of Hormuz is closed the greater the

disruption and therefore the uncertainty around oil prices,"

said Dan Boston, global head of the small company team at Polar

Capital in Florida. "You're seeing anything from food to

transportation costs filtering their way into inflation

expectations. As those expectations rise, consumer sentiment

starts to fall as well."

The University of Michigan's index of U.S. consumer

sentiment fell more than expected in March, touching a

three-month low.

The pan-European STOXX 600 index dropped 0.95%.

Germany's DAX index fell 1.4% while London's FTSE 100

index shed 0.05%.

MSCI's index of Asian shares excluding Japan fell 0.9% overnight

. MSCI's gauge of stocks across the globe

fell 1.34%.

NASDAQ VEERS INTO CORRECTION TERRITORY

The tech-focused Nasdaq Composite veered into correction

territory after dropping 2.4% on Thursday, leaving the index

down nearly 11% from its record close in late October.

"The unbridled optimism that propelled Nasdaq to all-time

highs in the fourth quarter is fading as the macro backdrop

sours and uncertainty about the impact of AI across the tech

ecosystem clouds the horizon," James St. Aubin, chief investment

officer at Ocean Park Asset Management, said.

BOND YIELDS RISE

Government bond yields rose, as central banks are seen as

more likely to raise interest rates to head off a potential

inflationary shock stemming from higher energy costs. Yields

rise as prices fall and vice versa.

The 10-year U.S. Treasury yield, which sets the tone

for borrowing costs around the world, rose more than 1 basis

point to 4.432%.

Money markets now see a roughly 60% chance the U.S. Federal

Reserve raises rates this year, a sharp change from late

February when traders were betting on two cuts in 2026.

Germany's 10-year bond yield rose 0.7 basis

points to 3.105%.

The U.S. dollar was slightly higher against the major peers

including the euro, Japanese yen and Swiss franc.

The dollar rose to its highest level against the yen

since July 2024. It was last up 0.35% to 160.365 yen. The dollar

was up 0.50% to 0.79810 versus the Swiss franc. The euro

was down 0.15% at $1.151250.

The U.S. dollar index, which tracks the currency against

six peers, rose 0.27% to 100.16 for a fourth straight session of

gains.

Spot gold was up 3% to $4,513.73 an ounce.