(Updates prices throughout with U.S. market close, adds oil

settlement and fresh analyst quote)

* Oil prices surge as Gulf hostilities threaten Strait of

Hormuz reopening

* AI demand drives global stocks to record highs despite

Iran war

* Wall Street stocks finish higher

* Dollar rises as gold falls

By Chibuike Oguh

NEW YORK, June 1 (Reuters) - Global stocks clung to

record highs on Monday as strong corporate results, fueled in

part by artificial intelligence optimism, outweighed investor

concerns over escalating U.S.-Iran tensions that have pushed oil

prices higher.

The United States said it struck Iranian military sites during

the weekend and Iran's Revolutionary Guards said on Monday it

had targeted a U.S. base in response. Iranian news agency Tasnim

said Iran is halting indirect negotiations with the United

States after Israel ordered troops to push deeper into Lebanon

to battle Iranian-backed Hezbollah.

The fresh hostilities could complicate diplomatic efforts to end

the three-month-old war.

On Wall Street, stocks eked out gains to finish near record

highs after trading flat early in the session as energy and

technology stocks took the front seat, while utilities and

consumer discretionary led losers.

The Dow Jones Industrial Average rose 0.09%, the S&P

500 added 0.26%, and the Nasdaq Composite gained

0.42%.

The pan-European STOXX 600 index fell 0.76%.

"The Iran story continues to swirl around in the background,

and I think it's pretty interesting and impressive that the

market has been able to, not completely ignore it, but dismiss a

lot of the noise," said Amanda Agati, chief investment officer

at PNC Asset Management Group in Philadelphia.

"Earnings growth and Q1 earnings season, and even the

revisions for Q2, are looking really strong. And so I think it's

just sort of this interesting dynamic where usually the

headlines are driving the market narrative, but this market is

trying to price a path to peace, whatever that ultimately looks

like," Agati said.

Nvidia ( NVDA ) unveiled a new chip on Monday that puts AI

capabilities directly into laptops and desktop computers,

raising the stakes in the battle for dominance among other

semiconductor makers and technology companies.

AI giant Anthropic said on Monday it has confidentially filed

for a U.S. initial public offering.

The MSCI All-World index rose 0.10% after

hitting a fresh record high on the day.

"We are in an unusual period for the market where the

fundamentals and technicals converge to drive markets higher,

with strong earnings revisions and relentless buying," said Mark

Hackett, chief market strategist at Nationwide in Philadelphia.

"Equity markets have been largely immune to Iran news over the

past several weeks because investors are afraid of being caught

on the wrong side if a significant development occurs."

Brent crude futures rose 4.24% to settle at $94.98 a

barrel.

DATA LINE UP

Investors are eyeing commentary from a host of Federal

Reserve speakers this week as well as major U.S. data including

the May payrolls report on Friday.

U.S. manufacturing activity increased more than expected in May,

hitting the highest level in four years, likely driven by

businesses front-loading orders amid rising prices and shortages

because of the Iran war, Institute for Supply Management data

showed on Monday.

The yield on benchmark U.S. 10-year notes held

steady at 4.453%.

"Inflation is still a major story: you see it in the

long-term bond yields and continue to see it in crude oil," said

Bill Strazzullo, chief market strategist at Bellcurve Trading in

Boston. "The situation in Iran is still a mess. But all that

said, the short-term momentum still pushes higher."

The dollar rose against major currencies including the euro

and yen.

The euro was down 0.25% against the dollar at $1.163.

The Japanese yen weakened 0.26% against the greenback to

159.69 per dollar, remaining near the 160 level that prompted

authorities to intervene to support the currency.

Against the Swiss franc, the dollar strengthened

0.72% to 0.787. The dollar index, which measures the

greenback against a basket of currencies including the yen and

euro, rose 0.19% to 99.20.

Spot gold fell 1.17% to $4,482.54 an ounce while

bitcoin fell 2.88% to $71,534.19.