(Updates to US market open)

* Fed, ECB, BOJ, BOE all due to weigh in on economic

outlook this week

* Oil prices rise amid Iran-UAE tensions

* US Fed expected to hold rates steady amid current oil

shock

By Chuck Mikolajczak

NEW YORK, March 17 (Reuters) - Global stocks rose on

Tuesday for a second straight session, even as the war in Iran

drove up oil prices and ahead of a flurry of policy

announcements from global central banks this week.

Israel said it killed Iran's security chief, while a senior

Iranian official said the new supreme leader had rejected

de-escalation offers conveyed by intermediaries.

U.S. crude rose 1.24% to $94.66 a barrel and Brent

climbed to $101.73 per barrel, up 1.52% as Iranian

attacks on the United Arab Emirates rekindled supply fears while

the Strait of Hormuz remains largely shut. Both Brent and U.S.

crude are up more than 40% for the month.

MAJOR S&P SECTORS ADVANCE

On Wall Street, U.S. stocks were higher in early trading,

led by a 1.7% rise in the S&P 500 financial index as

each of the 11 major S&P 500 sectors advanced.

The Dow Jones Industrial Average rose 432.97 points,

or 0.92%, to 47,379.38, the S&P 500 gained 44 points, or

0.66%, to 6,743.38 and the Nasdaq Composite rose 146.77

points, or 0.66%, to 22,520.95.

MSCI's gauge of stocks across the globe rose

8.7 points, or 0.86%, to 1,016.85 and was on track for its first

consecutive daily gains in three weeks, while the pan-European

STOXX 600 index rose 0.92%.

The jump in oil prices and its potential to boost inflation

have led markets to adjust expectations for easing policies from

global central banks this year.

Markets are pricing in about 27 basis points of cuts from

the U.S. Federal Reserve by the end of the year after pricing in

more than 50 basis points earlier this week, and roughly 35

basis points of hikes from the European Central Bank after

pricing in a modest chance of a cut this year as recently as

February, according to LSEG data.

While investors were largely not pricing in any cuts from

the Fed at Wednesday's policy announcement, the timing of any

future cuts has been pushed further out this year.

"There are too many moving parts in a regular economy and

then on top of it, we have this tremendously impactful conflict,

which will make it even more impossible for the Fed to discern

any patterns right now," said Peter Andersen, founder of

Andersen Capital Management.

"I would expect the Fed to stay on hold and to have a very

unremarkable transcript and press conference."

Operations at the UAE's Shah gas field remained suspended on

Tuesday, while a new attack caused a fire in the key oil export

terminal of Fujairah, highlighting how Tehran is disrupting

energy flows from the region.

Stock markets rallied on Monday as oil prices dipped on hopes

shipping flows from the Gulf would improve and optimism about

artificial intelligence helped boost U.S. tech companies.

CENTRAL BANKS GRAPPLE WITH ENERGY PRICES

The Reserve Bank of Australia voted on Tuesday to hike interest

rates for a second straight month, taking its benchmark rate to

4.1% while warning of a material risk to inflation due to the

Middle East war.

It set the tone ahead of policy statements from central

banks in the U.S., Britain, euro zone, Japan, Canada,

Switzerland and Sweden this week, all of which will hold their

first meetings since the start of the Iran war. Investors will

look for clues on how rising crude prices could affect the

interest-rate path.

The U.S. Fed is largely expected to hold rates steady at its

policy announcement, and policymakers are more likely to strike

a cautious if not outright hawkish tone this week due to the

current oil shock.

The shifts in central bank expectations have led to large

moves in government bonds, although moves were subdued on

Tuesday.

The yield on benchmark U.S. 10-year notes fell

1.8 basis points to 4.202% but is up about 25 basis points for

March. The 2-year note yield, which typically moves

in step with interest-rate expectations for the Federal Reserve,

fell 1.5 basis points to 3.665% but is up nearly 30 basis points

for the month.

The dollar index, which measures the greenback

against a basket of currencies, fell 0.33% to 99.53, with the

euro up 0.32% at $1.154.

Against the Japanese yen, the dollar weakened 0.21% to

158.72, shy of the key 160 level that has sparked prior

interventions from the Bank of Japan, despite verbal warnings

from the Japanese authorities on Tuesday.