* Nikkei futures slide, S&P futures pare early losses

* Brent crude up 59% in March, biggest monthly rise ever

* Gulf peace talks uncertain as US builds up troops

(Updates prices)

By Wayne Cole

SYDNEY, March 30 (Reuters) - Stock markets slid in Asia

on Monday as investors dug in for a protracted Gulf conflict

that already has oil prices heading for a record monthly rise,

bringing a spike in inflation and the risk of recession to much

of the globe.

Pakistan said it was preparing to host "meaningful talks" to

end the conflict over Iran in coming days, even though Tehran

accused Washington of preparing a land assault as the U.S.

military builds up forces in the region.

The Financial Times late on Sunday quoted President Donald

Trump saying the U.S. could seize Kharg Island in the Persian

Gulf, from where Iran exports much of its oil, but also that a

ceasefire could come quickly.

Yemen's Iran-aligned Houthis also launched their first

attacks on Israel since the start of the conflict.

"Iran's control of the Strait of Hormuz, capacity to disrupt

global energy and food markets, and sustained missile and drone

capabilities give it little incentive to concede, pressuring the

U.S. to escalate," said Madison Cartwright, senior geo-economics

analyst at Commonwealth Bank of Australia.

"We expect the war to run at least into June, with the risk

tilted to a longer conflict."

The clampdown on the strait has sent prices for oil, gas,

fertiliser, plastic and aluminium surging, along with fuel for

planes and shipping. Prices for food, pharmaceuticals and

petrochemical products are all set to rise.

That is bad news for Asia, as much of the region is highly

dependent on energy from the Middle East. Japan's Nikkei

shed another 3.4%, bringing losses for March to nearly 13%.

South Korea's market was down 3.0% on Monday, while

Chinese blue chips lost 0.2%. MSCI's broadest index of

Asia-Pacific shares outside Japan dropped 1.3%.

S&P 500 futures and Nasdaq futures pared their

early losses to be a fraction easier. For Europe, EUROSTOXX 50

futures and DAX futures both fell 0.7%, while

FTSE futures dipped 0.4%.

Brent crude rose 2.0% to $114.90 a barrel, bringing

its gains for the month to almost 59% and outpacing the jump

that followed Iraq's invasion of Kuwait in 1990. U.S. crude

climbed 1.8% to $101.39, making a monthly rise of 51%.

"The longer the Strait remains closed, the sharper the

drawdown in buffer supplies that could spark dramatic increases

in the price of crude oil, natural gas and other commodities,"

warned Bruce Kasman, global head of economics at JPMorgan.

"A scenario in which the Strait remains closed for an

additional month would be consistent with oil prices rising

towards $150/bbl and constraints on industrial consumers of

energy supply."

FED IN FOCUS AS PAYROLLS LOOM

The inflationary threat has led investors to revise up the

outlook for interest rates almost everywhere. Markets now imply

12 basis points of tightening by the Federal Reserve this year,

compared with 50 basis points of cuts a month ago.

Fed Chair Jerome Powell will have a chance to air his own

views at an event later on Monday and the influential head of

the New York Fed, John Williams, is also talking.

Data on U.S. retail sales, manufacturing and payrolls this

week will provide an update on how the economy is faring. Jobs

are seen rising 55,000 in March, after February's shock 92,000

drop, keeping unemployment at 4.4%.

In the European Union, figures on Tuesday are forecast to

show annual inflation leaped to 2.7% in March from 1.9% the

month before, though core prices should be steadier.

The energy shock, combined with pressure on fiscal budgets

from higher borrowing costs and the need for more defence

spending, has slugged sovereign bond markets.

Ten-year U.S. Treasury yields are up roughly

44 basis points for the month so far at 4.407%, while two-year

yields have climbed 50 basis points.

Heightened volatility in markets has tended to benefit the

U.S. dollar as the world's most liquid currency. The U.S. is

also a net energy exporter, giving it a relative advantage over

Europe and much of Asia.

Yet warnings of possible intervention from the Japanese

authorities did see the dollar ease 0.3% to 159.74 yen

. It crossed the 160 barrier last week for the first

time since July 2024 when Japan last acted to buy yen.

The euro was stuck at $1.1513, not far from a

March trough of $1.1409.

In commodity markets, gold was flat at $4,493 an ounce

, having drawn scant support as a safe haven or as a hedge

against inflation risks.