* S&P 500, Nasdaq hit record closing highs

* Oil steadies after Reuters reports Iran offers Hormuz

proposal

* Investors hope for swift end to Iran war

* US dollar nearly unchanged, errs on the side of a

decline

(Updates with closing prices)

By Isla Binnie

NEW YORK, April 15 (Reuters) - Wall Street's stock

benchmark S&P 500 and tech-heavy Nasdaq closed at record

highs as hopes for a cooling of U.S.-Iran tensions and strong

earnings expectations boosted risk appetite on Wednesday, while

oil prices steadied after news Iran could make allowances for

ships around the Strait of Hormuz.

U.S. President Donald Trump said the war he launched with

Israel was "close to over" and the White House expressed

optimism about a deal, but industry sources said transit through

the Strait of Hormuz, a crucial waterway for global oil and gas

shipments, is running at a fraction of its usual volume.

A source briefed by Tehran told Reuters Iran could consider

allowing ships to sail freely through the Omani side of the

strait if a deal was reached to prevent renewed conflict.

The S&P 500 rose 0.80%, to 7,022.95 and the Nasdaq

Composite rose 1.60%, to 24,016.02, but the Dow Jones

Industrial Average fell 0.15%, to 48,463.72.

"Equity markets, especially in the United States, have

rallied back pretty aggressively, showing a decent amount of

confidence that this is probably over, or close to the end,"

said David Seif, chief economist for developed markets at

Nomura, referring to "the supply disruption that comes from

Hormuz being closed."

In a Fox Business Network interview conducted on Tuesday and

broadcast Wednesday, he said, "I view it as very close to over."

White House press secretary Karoline Leavitt told a news

conference, "We feel good about the prospects of a deal."

Major banks reported rising profits, kicking off an earnings

season analysts expect to show growth across the S&P 500.

Bank of America ( BAC ) and Morgan Stanley both reported

strong first quarters, pushing their shares up 1.8% and 4.5%

respectively.

OIL STEADIES

Oil steadied following steep falls during the previous

session, as the stranglehold on the Strait of Hormuz countered

optimism about peace talks.

Energy consulting firm Gelber & Associates said a small but

increasing number of tankers were moving through the strait. The

market was "no longer pricing a full-scale outage, but still

holding a residual premium as flows recover unevenly rather than

snapping back to normal," the analysts said.

U.S. crude settled up 0.01% at $91.29 a barrel, while

Brent rose 0.15% to $94.93 per barrel.

The U.S. Energy Information Administration reported a

surprisingly large draw on U.S. weekly crude, supporting prices.

DOLLAR DRIFTS

The U.S. dollar held nearly unchanged, fluctuating slightly

but on track for its eighth straight session of declines.

The dollar index, which measures the U.S. currency

against six units, was last up 0.01% at 98.08.

"Not only are we at the mercy of the headlines over the

conflict, but now the focus is going to be on economic

growth," said Juan Perez, senior director of trading at Monex

US.

TREASURIES SLIDE

Continuing caution tied to the Middle East hostilities saw

U.S. Treasuries slide, reversing some of their recent gains.

The two-year Treasury yield, which typically

moves in step with expectations for the Federal Reserve's next

moves on interest rates, rose 1 basis point to 3.761%. The

10-year yield was up 2.5 basis points to 4.282%.

Disruptions to global energy markets from the Iran war have

had more of an effect on European markets than on the United

States, which is a net energy exporter, Nomura's Seif said.

"If you look at what has happened to bond prices in the

U.S., Treasuries, versus in Europe, it hasn't been good for U.S.

bond prices but it has been arguably a lot less negative," Seif

said.

The yield on benchmark German 10-year Bunds rose

1.5 basis point to 3.045%, from 3.03% late on Tuesday.

(Additional reporting by Chuck Mikolajczak and Gertrude Chavez

in New York, Tom Wilson in London and Stella Qiu in Sydney;

Editing by Kevin Buckland, Kim Coghill, Nick Zieminski and

Janane Venkatraman)