* Ceasefire contingent on Iran opening Strait of Hormuz -

Trump

* Iran says it will provide safe passage through the

waterway

* Focus on whether ceasefire leads to broader resolution

* Dollar slides broadly as risk sentiment improves

(Updates after European markets open)

By Iain Withers and Ankur Banerjee

LONDON/SINGAPORE, April 8 (Reuters) - Oil prices sank

below $100 a barrel and stocks and bonds surged on Wednesday,

after U.S. President Donald Trump announced a two-week ceasefire

with Iran that brought some relief to markets on hopes for a

resumption of oil and gas flows through the Strait of Hormuz.

Trump announced the ceasefire less than two hours before his

deadline for Iran to reopen the strait or face devastating

attacks on its civilian infrastructure. Iran said it would cease

counter-attacks and provide safe passage through the waterway if

attacks against it stop.

The market rally revived investor talk of the 'TACO trade' -

or 'Trump Always Chickens Out' - after past policy reversals,

although some noted the damage to energy infrastructure across

the Middle East over the month-long conflict would inflict

long-termstrains on the global economy and the prospect of a

lasting peace were far from certain.

"It's a huge relief to see that we finally have a ceasefire

between the U.S. and Iran," said Nabil Milali, portfolio manager

at Edmond de Rothschild, adding he believed Trump had calculated

that further escalation would likely backfire.

"So he did the only other option he had in front of him,

which is a unilateral TACO," he said.

Oil prices would likely remain "structurally higher" for a

while, he added.

Brent oil futures were last down 13.8% at $94.27, while U.S

crude futures were down 15.4% at $95.55 a barrel, but were still

well above pre-war levels.

European stocks rose nearly 4% in early trading,

following strong gains across Asian markets. Wall Street futures

pointed to gains of 2.5%-3.2%.

The U.S. dollar fell broadly, having been the haven of

choice during the tumult, with the index against other major

currencies easing to 98.819.

"Markets can worry about the complexities later. For now,

they've been given the green light to rally," said Matt Simpson,

a senior market analyst at StoneX.

TWO WEEKS OF RELIEF

Beyond the immediate relief, investors were keen to see

whether the ceasefire leads to a broader resolution before

placing major bets.

"Does it mean people are going to take new risks? No, it

doesn't," said Martin Whetton, head of financial markets

strategy at Westpac. "It would have to actually be a lasting

peace (to change things). People aren't actually taking risk."

Gold prices climbed 2.4% to $4,814 per ounce.

U.S. Treasuries surged after the announcement with traders

putting the prospect of rate cuts from the Federal Reserve later

in the year back on the table, although doubts about whether oil

prices will go back to pre-war levels kept enthusiasm in check.

The yield on the benchmark U.S. 10-year Treasury note

dropped to 4.244%, the lowest since mid-March, while

the U.S. 2-year Treasury notes sank to 3.7235%.

Euro zone government bond yields also dropped sharply, as

the ceasefire prompted traders to dramatically scale back their

bets on future rate hikes from the European Central Bank.

"The evolution of oil would determine if this rally (in

bonds) continues or gets faded which of course depends on how

the negotiations go," said Rohan Khanna, head of euro rates

strategy at ‌Barclays.

"In the very short term, it may remove the impulse for the

ECB to hike rates in April and the market has repriced that

meeting accordingly, but the meeting is still three weeks away

and that's a long time in these markets."