(Updates ahead of US market open)

* Equity markets turn risk-off on AI blip, US-Iran

hostilities

* Oil falls back from recent peaks on Israel-Lebanon

ceasefire

* Yen rises from intervention zone; bitcoin hits

four-month low

By Marc Jones

LONDON, June 4 (Reuters) - World stocks were facing a

second straight day of falls on Thursday as a glitch in the AI

rally and renewed fighting between the U.S. and Iran dampened

the mood, while oil prices eased after Israel and Lebanon agreed

a ceasefire.

Europe's bourses were mostly going sideways as both crude

and bond yields dipped, but Wall Street futures were

pointing lower after a dive in AI chipmaker Broadcom's ( AVGO ) shares

and a difficult day for other tech-heavy indexes.

South Korea's stock market had fallen as much as

2.6% in Asia, while Japan's Nikkei 225, Hong Kong and

Taiwan all ended between 1.4% and 1.7% lower following

Wednesday's after-hours 13% plunge in Broadcom's ( AVGO ) stock.

Not only had the firm's second-quarter revenue missed

expectations, but it left its long-range sales forecast

unchanged, disappointing traders, who viewed it as a rare sign

that a major AI chipmaker may be losing steam.

"You have had a bit of softness in equity markets following

Broadcom ( AVGO ), which suggests we need a bit of time to consolidate

what has been a very strong rally," said Marlborough fund

manager James Athey.

"It wasn't about hope and expectation, it raised the notion

that demand for chips is not just going to expand exponentially

into the future."

Brent crude prices dropped 3.5%, to back below $95 a

barrel, after Lebanon and Israel agreed a ceasefire, contingent

on a complete cessation of fire from the Iran-aligned Hezbollah

militia.

It raised hopes for progress toward ending the wider

U.S.-Israeli war with Iran, though there was still uncertainty

about how and when that might be implemented.

U.S. President Donald Trump had said on Wednesday that there

could be progress by the weekend but Bahrain said it intercepted

three missiles and several drones, while Kuwait briefly

suspended air traffic at its main airport after an attack there.

Iran's foreign minister Abbas Araghchi said that no tangible

progress had been made in talks with the U.S. and posted that

"any hostile act will be met with an immediate, decisive

response".

COORDINATED MOVES

The Broadcom ( AVGO ) disappointment was dragging down other top

chipmakers Micron Technology ( MU ), Advanced Micro Devices ( AMD )

, Marvell Technology ( MRVL ) and Qualcomm ( QCOM )

between 4% and 7.5% in premarket Wall Street trading.

It is likely to end the S&P 500's impressive

nine-week run of unbroken weekly gains although with it now up

more than 10% for the year already, there won't be too many

worries among the bulls.

In the currency markets, the yen edged up to 159.8

per dollar, providing a little bit of breathing room from the

160 threshold currently viewed as the Bank of Japan's FX

intervention trigger point.

Chief Cabinet Secretary Minoru Kihara had said in Tokyo that he

expects the central bank to coordinate its moves with the

government after BOJ Governor Kazuo Ueda had given fresh hints

that an interest rate hike is on the cards this month.

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

strength against a basket of six other major currencies, was off

0.3% from the two-month high hit on Wednesday in the wake of

better-than-expected U.S. PMI services sector data.

Businesses preemptively placed orders and rebuilt

inventories, the figures had showed, in anticipation of

shortages and higher prices in the wake of the Iran war.

The Republican-led U.S. House of Representatives had approved a

war powers resolution on Wednesday to block Donald Trump from

continuing the conflict against Iran.

The measure is largely symbolic, however, as it must still

pass the Senate and would need a two-thirds majority in both

chambers to override an almost certain presidential veto.

Subsiding oil prices help nudge 10-year Treasury yields -

the key driver of global borrowing costs - down to 4.45%, while

Germany's Bund yield was trying to get back under 3%

despite an expected ECB rate hike next week.

The Aussie dollar and gold got modest lifts too after a

rebound in resource exports helped swing Australia's trade

balance back into the black.

Bitcoin fell 2.2% to below $64,000, having now lost

almost 25% in recent weeks.