* Israel military intercepts Hezbollah missile as

Netanyahu begins peace talks

* Brent crude edges up as Trump warns Iran over Strait of

Hormuz

* Fed fund futures indicate focus on April 2027 for

possible easing

By Gregor Stuart Hunter

SINGAPORE, April 10 (Reuters) - Asian stocks ticked up

early on Friday but gains were capped as traders questioned the

durability of this week's U.S.-Iran ceasefire and remained wary

of fragile hopes for Israel-Lebanon peace talks.

Investors were nervous as Iran cited Israel's ongoing attacks

on Lebanon as a key sticking point in its agreement with the

U.S.

MSCI's broadest index of Asia-Pacific shares outside Japan

gained 0.5%, led by a 1.9% jump for South

Korea's Kospi. Japan's Nikkei 225 tacked on

1.5%, while S&P 500 e-mini futures reversed earlier

losses to trade flat.

"The U.S.-Iran ceasefire led to a sharp recovery in Asian

markets but the risk-on sentiment got tested yesterday," said

Rupal Agarwal, Asia quant strategist at Bernstein in Singapore.

"We believe this could be the beginning of the end and is

presenting an opportunity for investors to focus on pre-war

trends and fundamentals," she said. "We recommend adding back

some beaten-down names."

On Thursday, the S&P 500 rose 0.6%, with MSCI's

benchmark of global equities making modest gains after Israeli

Prime Minister Benjamin Netanyahu said on Thursday he is seeking

direct talks with Beirut - a day after the worst bombardment of

the war killed more than 300 people in Lebanon and placed the

U.S.-Iran ceasefire in jeopardy.

Brent crude rose 1% to $96.83 a barrel as trading

resumed in Asia, after Hezbollah launched a missile at Israel,

triggering air raid sirens in parts of the country, including in

Tel Aviv.

The Strait of Hormuz remains largely closed to shipping,

with marine traffic at well below 10% of normal volumes on

Thursday as Tehran asserted its control of the strategic

waterway that typically carries one-fifth of global oil and gas

shipments.

The closure of the strait during the six-week Iran war sent

shockwaves through global markets as oil prices surged and

energy supplies tightened.

U.S. President Donald Trump weighed in with a blunt warning.

In a post on Truth Social, he said Iran was doing a "very poor

job" of allowing oil to pass through the strait. "That is not

the agreement we have!" he wrote, underscoring Washington's

frustration as the market fallout intensified.

The U.S. dollar index, which measures the greenback's

strength against a basket of six currencies, was up 0.1% at

98.92, after data released Thursday showed weekly jobless claims

increased by 16,000 to 219,000 and continuing claims fell by

38,000 to 1.794 million, the lowest level since May 2024.

The Core PCE price index also rose 0.4% for second straight

month, reflecting a year-on-year increase of 3.0%.

The yield on the U.S. 10-year Treasury bond was up 0.6 basis

point at 4.285%.

Fed funds futures show traders bringing forward expectations

for the Federal Reserve's next 25-basis-point rate cut to April

2027. The implied probability that the U.S. central bank stays

on hold at its meeting that month has slipped to 49.6%, from 64%

on Thursday, when markets still leaned toward easing later in

the year, according to the CME Group's FedWatch tool.

Elsewhere, in the latest blow to the embattled private

credit asset class, investors have asked to pull more than 15%

of their assets from Carlyle's flagship private credit

interval fund, the group said in a shareholder letter on

Thursday.

Bitcoin was down 0.7% at $71,903.27, while ether

was 1.0% lower at $2,191.81.