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Investors jittery as Iran/Israel fighting enters fifth day

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Trump says he wants a "real end" to Iran nuclear dispute

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Crude prices climb as much as 2%, gold rises

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Fed scheduled to start two day policy meet on Tuesday

By Amanda Cooper

LONDON, June 17 (Reuters) - Stocks fell, while oil and

gold rose on Tuesday, as fighting between Israel and Iran

entered a fifth day, making investors nervous over the risk of

the conflict widening in a week packed with key central bank

decisions.

U.S. President Donald Trump urged everyone to evacuate

Tehran and cut short his visit to the Group of Seven summit in

Canada. He said he wanted a "real end" to the nuclear dispute

with Iran and indicated he may send senior U.S. officials to

meet with representatives from Tehran.

With nerves running high over the conflict, S&P 500 futures

fell 0.6%, while crude prices rose as

much as 2.2% to a high of $74.85 a barrel, bringing gains in the

last week to around 11%.

Adding another layer of complexity for investors this week

is a raft of central bank meetings, starting with the BOJ and

including the Federal Reserve, Bank of England and Swiss

National Bank.

"Investors are trying to take all this on board. It is very

difficult at the moment, I think. And there's an understandable

degree of nervousness. Should I really be holding on to these

stocks now at these levels?" Chris Beauchamp, chief market

analyst at IG, said.

"Once the central bank parade is out of the way, then we

might get a better sense of where they view things."

The heightened uncertainty kept investors flocking to

traditional safe-haven assets, as a rise in U.S. Treasuries

pushed yields lower across the curve, while gold prices

edged up 0.3%.

Stocks in Europe sagged, leaving the STOXX 600 down

almost 1% on the day and around its lowest in three weeks, while

euro zone government bond yields held steady.

The major concern for investors with the conflict between

Israel and Iran is the potential for it spill over into the

broader Middle East, home to a large portion of the world's oil

supply.

No disruptions to crude supply have been reported yet,

although news of a collision between two ships in the Gulf of

Oman sent another brief jolt through the oil market overnight.

Aside from the oil price, financial markets are not

displaying especially high levels of volatility.

The VIX volatility index has risen in the last week,

but at around 20.8 is well below April's highs above 60 and

nowhere near the records above 80 during the 2008 financial

crisis.

"This is happening at a point in time where we are less

sensitive, first of all the fact being that oil prices are still

down year to date, and secondly the macro economy is ... showing

that financial markets are relatively resilient at the moment,"

Bjarne Breinholt Thomsen, head of cross asset strategy at Danske

Bank, said in a webinar on Tuesday.

BOJ OUTLOOK

The Bank of Japan, the first major central bank to decide on

monetary policy this week, left short-term interest rates

unchanged at 0.5% as expected. The central bank said it would

slow the pace at which it is unwinding its massive holdings of

government bonds to avoid disrupting the market.

Weak demand for Japanese government bonds (JGBs) at recent

auctions, along with concern about the country's finances, sent

longer-dated borrowing costs spiralling to record highs last

month.

The yen held steady, leaving the dollar at 144.755.

Meanwhile, the Federal Reserve is expected to keep rates

unchanged on Wednesday. Policymakers will also release new

projections for interest rates, which investors will assess to

get a sense of how the committee believes the Trump

administration's tariffs could affect growth and inflation.

Traders are pricing in two cuts by the end of the year.

Meanwhile, tariff negotiations between Japan and the United

States on the sidelines of the G7 summit fell short of a

breakthrough, while a deal with Britain left unresolved the

issue of steel and aluminium duties.

Gold, which has gained 30% so far this year, was up

another 0.4% at $3,395 an ounce.

(Additional reporting by Lucy Raitano in London and Johann M

Cherian and Ankur Banerjee in Singapore; Editing by Kim Coghill,

Bernadette Baum and David Evans)