* Brent falls 1% as tankers move through the Strait of

Hormuz

* Wall Street futures slip, cash Treasuries closed for U.S.

holiday

* Dollar stands tall near one-year high, eyes on yen amid

intervention risks

By Stella Qiu

SYDNEY, June 19 (Reuters) - Shares climbed to record highs

in Japan and South Korea on Friday as peace in the Middle East

with the reopening of the Strait of Hormuz pulled oil prices

even lower and eased inflation fears.

The U.S. dollar was on a tear, hovering near a 13-month high

on its major peers, after a hawkish turn from the Federal

Reserve led markets to price in more than one rate hike this

year. That dragged the yen to the weakest level in two years

and intensified speculation that Japanese authorities

might have to intervene soon and stem the currency's slide.

Oil tankers have started sailing through the Strait of

Hormuz after the United States lifted its blockade on Iran on

Thursday as an interim deal to end the three-month war took

effect. Brent crude futures dropped 1% on Friday to

$79.03 a barrel, and were down 9.5% for the week.

Share markets have had a blockbuster week. Japan's Nikkei

gained 0.8% to hit a new record for the fifth straight

session, extending its weekly gain to 8.5%. South Korea

jumped 3.1%, adding to its weekly rise of 15.3%.

Mainland China and Hong Kong's stock markets are closed for

the Dragon Boat Festival holiday. Taiwan was also on holiday.

Despite market optimism about the resumption of oil flows

through the Strait of Hormuz, analysts cautioned that Iran was

unlikely to relinquish control over the strait.

"Future governance of the Strait will be led by Iran and

Oman, creating scope for Iran to impose a 'maritime service'

fee," said Madison Cartwright, a senior geo-economics analyst at

the Commonwealth Bank of Australia, noting the toll-free transit

was only guaranteed for 60 days.

"It undermines international norms on free navigation and

sets a precedent that could be followed by others."

Wall Street futures slipped 0.2% after the rally overnight.

Intel's ( INTC ) shares jumped 10% to a record high after U.S.

President Donald Trump said iPhone maker Apple ( AAPL ) had

agreed to work with Intel ( INTC ) to design and manufacture its chips in

the U.S.

DOLLAR STRENGTH

The U.S. dollar index is set for a weekly gain of 1%

on Friday at 100.78. That pushed the yen to 161.26 a dollar

, the lowest since July 2024 and well beyond the 160

level widely seen as a line in the sand for Japanese

intervention.

The British pound was off 0.1% at $1.3195, after a

0.7% drop overnight as the Bank of England kept interest rates

on hold in a 7-2 vote. Greater Manchester mayor Andy Burnham won

an election in the north of England on Friday, removing a key

obstacle to a leadership challenge against Prime Minister Keir

Starmer.

The dollar's strength reflected a sharp repricing of the Fed

rate outlook, after nine of 19 officials signalled higher

borrowing costs this year when the central bank held rates

steady as expected on Wednesday. New Fed Chair Kevin Warsh vowed

to deliver price stability.

That hit the short-term Treasuries hard, with two-year U.S.

Treasury yields up 9 basis points this week to 4.1790%, but

helped longer-dated bonds as investors were relieved by the drop

in oil prices and a central bank unmoved by political pressure

to cut rates.

Ten-year yields were down 3 bps to 4.4510% this

week, while 30-year yields slumped 7 bps to 4.9010%,

about the lowest in two months.

"The curve remained notably flatter than before the meeting,

reflecting the combination of higher expected policy rates and

firmer confidence in the Fed's inflation-fighting credibility,"

said Molly Nickolin, a strategist at Morgan Stanley.

The cash Treasuries market is closed in Asia due to the

Juneteenth holiday in the U.S.

Precious metals were under pressure due to a strong dollar.

Spot gold slipped 0.5% to $4,188 an ounce, while spot

silver also fell 0.8% to $65.30 an ounce.

(Editing by Shri Navaratnam)