* US stocks higher as chipmaker optimism returns

* Oil prices slip as costs return to pre-war levels

* Chipmaker rise comes ahead of critical AI earnings season

By Pete Schroeder

WASHINGTON, July 6 (Reuters) - Wall Street was higher in

midday trading Monday on the back of continued optimism around

chip stocks, while oil lost ground amid an anticipated surge in

supply.

In the early afternoon, all three major U.S. indices were

higher, after European stocks flirted with record highs earlier

in the day before retreating ahead of a crucial earnings season

for the AI sector.

The Dow Jones Industrial Average rose 0.07%, to

52,938.04, the S&P 500 was last up 0.73%, to 7,537.75 and

the Nasdaq Composite jumped 1.25%, to 26,155.56. MSCI's

gauge of stocks across the globe climbed 0.45%,

to 1,128.87.

The global AI boom continued to dominate markets. South Korean

chipmaker SK Hynix 000660.KS on Monday launched a U.S. share

sale to raise 43 trillion won ($28.07 billion) and drew

indications of interest for up to $7 billion from major

investors. And Broadcom ( AVGO ) announced it had expanded its

partnership with Apple ( AAPL ) to develop and supply custom

chips through 2031.

Elsewhere, Microsoft ( MSFT ) joined the trend of tech layoffs,

announcing it would eliminate around 4,800 jobs, roughly 2.1% of

its global workforce. Investors will be watching closely for how

artificial intelligence-related companies are faring amid some

fears about a bubble in the upcoming earnings season.

Delta Air Lines ( DAL ) and PepsiCo ( PEP ) are the big U.S.

names reporting this week. Samsung Electronics ( SSNLF ) is

set to make a splash on Tuesday as analysts expect an 18-fold

increase in profits.

OIL SLIPS

Oil prices were down but trading around pre-Iran war levels

Monday. U.S. crude fell 0.55% to $68.31 a barrel and

Brent fell to $71.75 per barrel, down 0.51% on the day.

While there were no new developments in the fractious

U.S.-Iran peace talks, ships are passing through the Strait of

Hormuz, with 160 vessels reported transiting from Monday to

Saturday last week.

OPEC+ also agreed to a further increase in output targets by

188,000 barrels per day from August.

The dip in oil prices looks to be extending some relief to

the private sector, as the decline helped to slow the pace of

increase in services inflation, according to new data from the

Institute for Supply Management. The ISM reported that U.S.

services sector activity dipped in June, but employment

rebounded after contracting for three straight months.

U.S. President Donald Trump will attend a NATO meeting in Turkey

this week, and Fed watchers will get another glimpse into how

new Chairman Kevin Warsh steers the central bank when it

releases Federal Open Market Committee minutes on Wednesday, the

first of his tenure.

"We expect Warsh to make the FOMC minutes less informative

with respect to the views expressed at the FOMC meetings. ...

Warsh explicitly avoided policy guidance in the statement and

press conference, so it seems unlikely that he would permit such

guidance via the minutes," Steve Englander, global head of G10

FX research and North American macro strategy at Standard

Chartered Bank, wrote in a note.

The yield on benchmark U.S. 10-year notes rose 0.22

basis points to 4.481%, from 4.479% late on Thursday.

In currency markets, the dollar index rose 0.07% to 100.94

after dipping in the wake of Thursday's

weaker-than-expected June U.S. payrolls report. The dollar

firmed 0.53% to 162.23 yen, not far from 40-year peaks

of 162.84, as speculators test Japanese authorities' resolve on

intervention.

In commodity markets, gold was 0.56% lower at $4,152.11 an ounce

, after bouncing 2% last week.