* Investors wary as Iran reviews US proposal

* Stocks and gold slip while oil advances

* Markets worried about energy price shocks

(Updates to Asia afternoon)

By Ankur Banerjee

SINGAPORE, March 26 (Reuters) - Asian stocks slid in

choppy trading while the oil rose on Thursday as investors

treaded cautiously amid the dizzying pace of developments in the

Middle East, with Iran saying it would weigh a U.S. proposal to

end the conflict.

The widening war has jolted global markets this month,

sending oil prices soaring, reigniting inflation fears and

upending global interest rate expectations.

Contradictory messages from the two sides over ceasefire

talks have kept investors on edge.

U.S. President ​Donald Trump said Iran was desperate to make

a deal while Iranian Foreign Minister Abbas Araqchi said there

had been no dialogue or negotiations with the U.S., although

various messages had been exchanged through intermediaries.

Japan's Nikkei reversed early gains to trade 0.7%

lower while South Korean stocks fell 2.7% and Hong

Kong'sHang Seng index slid 1.7%.

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

fell more than 1% lower, set for a 9.5% decline

this month, its biggest monthly drop since October 2022.

The sombre mood will continue in Europe, with stock futures

indicating a lower open. U.S. stock futures

were also down.

"It looks like the market's relief trade is starting to

wobble," said Charu Chanana, chief investment strategist at

Saxo. "Traders are also remembering that one peace rumour does

not undo the inflation and rates damage already in the system."

The nearly month-long war triggered by joint U.S.-Israeli

strikes on Iran in late February has resulted in Iran

effectively shutting the Strait of Hormuz, a conduit for a fifth

of global oil and liquefied natural gas flows.

The disruption has sent crude prices surging above $100 per

barrel. Brent crude futures were at $104.53, up over 2%

on the day, and set for a 43.6% jump in the month.

The dollar held firm near recent highs and was on track for

a 2% monthly gain, cementing its status as the preferred safe

haven.

The latest comments by Iran suggested some willingness by

Tehran to negotiate an end to the war if its demands were met.

The U.S. sent a 15-point ceasefire proposal to Iran that was

originally brushed aside by Iranian officials.

"If you look at what the U.S. wants to achieve, what Israel

wants to achieve, and what Tehran wants to achieve, it will be

very hard to reconcile all these points," said Matthias

Scheiber, senior portfolio manager and the head of the multi

asset team at Allspring Global Investments.

"We still think there is a case to make for structurally

higher energy prices for the moment."

Fears of an inflationary aftershock have pushed traders to

price out any chance of a Federal Reserve rate cut this year,

supporting the dollar. Bets on U.S. rate hikes briefly gained

traction but have since been pared back.

The yield on Japan's two-year government bond hit its

highest level in 30 years as traders cemented wagers of a Bank

of Japan interest rate hike as early as April.

European Central Bank President Christine Lagarde opened the

door on Wednesday to raising rates if war in the Middle East

pushes up inflation in the euro area for some time.

"If the shock gives rise to a large though

not-too-persistent overshoot of our target, some measured

adjustment of policy could be warranted," Lagarde said in

Frankfurt.

The euro was little changed at $1.1564, while

sterling bought $1.3362. The yen hovered at 159.44

per dollar, near the closely watched 160 level that traders see

as a potential trigger for intervention.

Gold reversed course to trade 0.3% lower at $4,439

per ounce as the selloff in the yellow metal extended. Gold is

on course for a 14% drop this month, which would be its steepest

monthly decline since October 2008.