(Updates prices)

* Oil falls 2.8% to lowest since early March

* Wall Street rises while Europe's STOXX 600 slips; Tokyo

and Seoul hit records

* Bank of England leaves rates on hold, as expected

By Sinéad Carew and Amanda Cooper

NEW YORK, LONDON, June 18 (Reuters) - MSCI's global equities

gauge was rising on Thursday while oil prices fell as an interim

deal to end the U.S.-Iran war allowed for the reopening of the

Strait of Hormuz and fueled some hopes that inflation could ease

and that the U.S. Federal Reserve may not need to tighten

monetary policy this year.

The United States and Iran signed an agreement on Wednesday that

extends a ceasefire announced in April by another 60 days to

allow the two sides to negotiate a truce. It also includes the

full resumption of maritime traffic "with no charge" in the

Strait of Hormuz. But U.S. President Donald Trump threatened to

resume attacks and kill Iranian officials if they failed to

honour their commitments.

Against that backdrop, oil prices touched their lowest

levels since early March, the dollar rose and U.S. Treasury

yields dipped. Stock indexes around the world were a mixed bag,

however, with shares in Tokyo and Seoul hitting

record highs overnight while European stocks fell.

Wall Street indexes gained ground as investors bet that a

re-opening of the Strait of Hormuz would ease inflation

pressures alongside energy prices and potentially lead to more

dovish monetary policy. On Wednesday, U.S. indexes closed lower

after the Federal Reserve indicated that it could hike interest

rates later this year, after the first meeting with Chair Kevin

Warsh at the helm.

"Energy stocks are down, but lower energy prices are going

to mean better profits for everybody else who uses energy. It's

going to mean less pressure on the consumer," said Brian

Jacobsen, chief economic strategist, Annex Wealth Management,

Brookfield, WI. "It's going to be less pressure on the Fed to

actually follow through on what they threatened, which is rate

hikes later this year."

Fed futures still indicated bets that the U.S. central bank

would hike rates this year with CME Group's FedWatch tool

showing a 38.6% probability that rates would be 25 basis points

higher by December and a 32.6% chance that they would rise by 50

basis points.

Jacobsen said that Thursday's trading was reflecting

investor caution about what happens after the 60-day negotiating

period between the U.S. and Iran.

"It's more a bounce than a change in direction. I'd expect

to move sideways from here for a little while. It's mostly

because there's enough skepticism out there. Will the memorandum

of understanding result in a lasting deal?" he said.

On Wall Street at 11:01 a.m. ET (1501 GMT), the Dow Jones

Industrial Average was 262.02 points, or 0.51%, higher at

51,754.57, the S&P 500 rose 74.17 points, or 1.00%, to

7,494.43 and the Nasdaq Composite rose 343.55 points, or

1.33%, to 26,368.43.

MSCI's gauge of stocks across the globe

rose 6.00 points, or 0.54%, to 1,127.12.

The pan-European STOXX 600 index fell 0.31%. Europe

is more vulnerable to an increase in inflation from higher oil

prices than the United States and so falling oil prices are good

for European economies, but the weight of energy shares kept the

pan-regional index slightly in the red.

In energy markets, U.S. crude fell 3.36% to $74.21 a

barrel and Brent fell to $77.13 per barrel, down 3.04%

on the day.

In currencies, the dollar rose for a second day after the Fed

meeting fanned expectations for higher rates with nearly half of

its policymakers indicating they now expect a hike this year, as

concerns mount on inflation.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

rose 0.21% to 100.56, with the euro down 0.14% at

$1.1483.

Against the Japanese yen, the dollar strengthened

0.14% to 160.84.

Sterling weakened 0.32% to $1.3248 after the Bank of

England left interest rates unchanged.

In Treasuries, the yield on benchmark U.S. 10-year notes

fell 3.14 basis points to 4.432%, from 4.463% late

on Wednesday, while the 30-year bond yield fell 4.82

basis points to 4.8788%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

fell 1.39 basis points to 4.149%.

In precious metals, spot gold fell 0.14% to $4,251.08 an

ounce. Spot silver fell 2.26% to $66.45 an ounce.