*

Markets on edge as Trump urges Tehran evacuation

*

Crude prices climb as much as 2%, gold prices edge higher

*

BOJ Governor Ueda to brief media at 0630 GMT

*

Fed scheduled to start two day policy meet on Tuesday

(Updates to early European trading)

By Johann M Cherian

June 17 (Reuters) -

Global stocks slid and oil prices rose on Tuesday as

fighting between Israel and Iran entered its fifth day, sowing

fears of a broader regional conflict, while investors took in

stride the Bank of Japan's decision to slow the pace of its bond

tapering.

U.S. President Donald Trump urged everyone to evacuate

Tehran and cut short his visit to the Group of Seven summit in

Canada, while a separate report said he had asked for the

National Security Council to be prepared in the situation room.

The developments sparked a wave of risk-off moves in which

S&P 500 futures fell 0.4% and European futures

dropped 0.7%.

Crude prices were last up 0.7% at about $73 a

barrel, after having briefly jumped more than 2% earlier in the

session.

"Suspicion is that we're about to see the United States

begin some sort of military action in Iran and we're now seeing

some risk aversion because it brings another element of

uncertainty," said Tony Sycamore, a market analyst at IG.

Heightened uncertainty drove investors to traditional

safe-haven assets, as a rise in U.S. Treasuries pushed yields

lower across the curve, while gold prices edged up 0.3%.

MSCI's broadest index of Asia-Pacific shares outside

Japan edged up 0.2%, while China and

Hong Kong equities slipped 0.1% each.

Markets fear that conflict between Tel Aviv and Tehran

could spill over into the oil-rich Middle East, though no

disruptions have been reported yet. Oil markets' reactions have

been the most volatile, while stocks and currencies have been

more guarded.

The air war between Iran and Israel, the longtime enemies'

biggest battle ever, escalated on Monday, with Israel targeting

Iran's state broadcaster and uranium enrichment facilities.

BOJ OUTLOOK

The

Bank of Japan

(BOJ) kicked off monetary policy decisions among central

banks this week, leaving short-term interest rates unchanged at

0.5% as expected. The central bank also decided to leave

unchanged its existing bond taper plan through March 2026, but

set out a new plan beyond next April to decelerate the pace of

its balance sheet drawdown.

After trying to prop up Japan's flagging economy through

JGB purchases for years, the BOJ has been trying to gracefully

shrink those holdings since July in a process called

quantitative tightening.

However, weak demand at recent auctions caused a surge

in super longer-dated yields to records last month and the

central bank is effectively offering support to the bond market

by a slowdown in tapering. The next test for markets will be an

auction of 20-year JGBs on June 24.

The yen firmed and last stood at 144.56 per

dollar, while yields on 5-year and 10-year bonds

rose about 3 basis points each as the BOJ's

outlook reflected less support for shorter-dated tenors.

Investors are now focussed on BOJ Governor Kazuo Ueda's

press conference at 0630 GMT.

"The slower pace of bond tapering was what the market

had hoped for and it help prevent long-term interest rates from

shooting up," Saisuke Sakai, a senior economist at Mizuho

Research and Technologies said.

"In that sense it could help reduce risks of sharp rises

in long-term interest rate, when the BOJ decides to raise the

policy rate again."

In a week filled with central bank meetings, the spotlight

next turns on the Federal Reserve.

The U.S. central bank is expected to hold rates steady on

Wednesday but the focus yet again will be on the path Fed Chair

Jerome Powell charts for future rate cuts as policymakers try to

navigate Trump's erratic tariff policies and their global

impact.

Traders are pricing in two cuts by the end of the year.

Investors also monitored developments on trade deals with

Trump's early July deadline on tariffs fast approaching.

Tariff talks between Japan and the United States on the

sidelines of the G7 summit fell short of a breakthrough, while a

deal with Britain left unresolved the issue of steel and

aluminium duties.