* Hopes of end to conflict evaporate after Trump speech

* Oil surges as stagflation risks swirl, denting risk

assets

* Stocks sharply lower as Trump speech provides little

clarity

* Investors likely to stay defensive as Trump ramps up

threats

(Updates with European market moves)

By Marc Jones and Ankur Banerjee

LONDON/SINGAPORE, April 2 (Reuters) - Oil prices surged

and global equity and bond markets recoiled again on Thursday

after U.S. President Donald Trump dashed hopes of a swift

resolution to the Middle East war.

Brent crude jumpedmore than 7% to trade near $108 a

barrel after Trump said in a prime-time address that the U.S.

would hit Iran "extremely hard" in the coming weeks and "bring

them back to the Stone Ages where they belong".

Although he also said the U.S. campaign was nearing an end,

the renewed rhetoric left Europe's main bourses and Wall Street

futures down at least 1% after Asian stocks gave back a large

chunk of the previous day's gains overnight.

Government bond yields jumped again on expectations that an

incoming inflation spike would force central banks to raise

interest rates, or at least keep them on hold.

The U.S. dollar, the haven of choice during the turmoil,

rose against most currencies, pushing the euro down 0.5%

to $1.1526 and sterling down 0.8% to just under $1.32.

"Over the past 48 hours, Tehran and Washington have

exchanged a cacophony of statements, some suggesting rising odds

of de-escalation. At the same time, kinetic action has continued

unabated," BCA Research's Felix-Antoine Vezina-Poirier said.

"Our GeoMacro strategists offer simple guidance for weighing

volatile headlines: Stick to the facts. First, shipping through

Hormuz has picked up over the past few days. Second, Iran is

deliberately shifting away from GCC targets toward Israeli

ones."

WALL STREET POINTS LOWER, ASIA CLOBBERED

Wall Street futures were pointing 1.3% lower. Asian

stocks were clobbered, with Japan's Nikkei

closing down 2.4% and South Korea's Kospi index

sliding 4.7%. Both indexes are heavily weighted towards

energy-intensive technology manufacturers.

"The only thing that really matters is whether the Strait of

Hormuz will open soon," said Prashant Newnaha, senior rates

strategist at TD Securities, referring to the narrow chokepoint

through which a fifth of global oil and liquefied natural gas is

shipped.

"Trump's speech doesn't imply this is likely to happen as

quickly as the markets were expecting."

Trump said on Wednesday the U.S. did not need the key oil

gateway and that it would open naturally once the conflict was

over.

Ten-year U.S. Treasury yields - a major driver

of global borrowing costs - climbed 5 basis points to 4.376%.

Benchmark European yields were up around 3

bps, though still on track for their first weekly drop since the

start of the war.

The dollar index, which measures the U.S. currency

against six other major currencies, was 0.5% higher at 100.05

after dropping nearly 1% in the previous two days on optimism

the war might end soon. It is up almost 2% for the year.

There were also growing signs of urgency in oil-importing

emerging markets.

India's central bank moved to ban trading of so-called

non-deliverable forwards on Thursday after the rupee's slide to

record lows. The move sent the currency up 2%., although

analysts questioned how long the rebound would last.

With Brent futures up 7.5% to $108.70 per barrel and

U.S. West Texas Intermediate up $6.40 to $106.52, it was

the nearly 90% leap in oil prices so far this year that remained

the main focus.

"The fact that we can expect 2-3 more weeks of action, boots

on the ground were not ruled out (during Trump's TV address) and

that threats to hit infrastructure were reiterated, will put the

market back on the defensive," Pictet Asset Management's Jon

Withaar said.