(New throughout, updates prices and adds fresh analyst quote)

* Oil prices surge as Gulf hostilities threaten Strait of

Hormuz reopening

* AI demand drives global stocks to record highs despite

Middle East tensions

* Benchmark S&P 500 flat but remain near record high

By Chibuike Oguh

NEW YORK, June 1 (Reuters) - Global stocks clung to

record highs on Monday as strong corporate results, fueled in

part by artificial intelligence optimism, outweighed investor

concerns over escalating U.S.-Iran tensions that have pushed oil

prices higher.

The U.S. said it struck Iranian military sites at the weekend

and Iran's Revolutionary Guards said on Monday it had targeted a

U.S. base in response. Also on Monday, Iranian news agency

Tasnim said Iran is halting indirect negotiations with the U.S.

after Israel ordered troops to push deeper into Lebanon to

battle Tehran-backed Hezbollah.

The fresh hostilities could complicate diplomatic efforts to end

the three-month-long war.

On Wall Street, the benchmark S&P 500 was mostly flat

but still near record highs as energy and technology stocks

drove gains while consumer discretionary, materials and

utilities led losers.

The Dow Jones Industrial Average fell 0.43%, the S&P

500 fell 0.05%, and the Nasdaq Composite

rose 0.11%.

The pan-European STOXX 600 index fell 1.1%.

Nvidia ( NVDA ) unveiled a new chip on Monday that puts AI

capabilities directly into laptops and desktop computers,

raising the stakes in the battle for dominance among other

semiconductor makers and technology companies.

The MSCI All-World index fell 0.20% after

hitting a fresh record high on the day.

"We are in an unusual period for the market where the

fundamentals and technicals converge to drive markets higher,

with strong earnings revisions and relentless buying," said Mark

Hackett, chief market strategist at Nationwide in Philadelphia.

"Equity markets have been largely immune to Iran news over

the past several weeks because investors are afraid of being

caught on the wrong side if a significant development occurs."

Brent crude futures rose nearly 7% to $97.43 a

barrel.