(Updates prices throughout with U.S. markets close)

* Hopes fade for Strait of Hormuz breakthrough

* Stocks dip, but AI hype provides support

* Dollar rises but yen weakens past 160

By Chibuike Oguh

NEW YORK, June 3 (Reuters) - Global stocks fell and oil

prices climbed on Wednesday as hopes for a swift end to the Iran

war faded, with renewed hostilities dampening risk appetite.

Wall Street's three main indexes pulled back from recent

record highs, dragged by technology and financial stocks, while

energy shares tracked the rise in crude.

The Dow Jones Industrial Average fell 1.21%, the S&P

500 lost 0.74%, and the Nasdaq Composite fell

0.89%.

The pan-European STOXX 600 index dipped 0.66%.

MSCI's gauge of stocks across the globe fell

0.65%.

Tensions in the Middle East escalated after Iranian attacks on

Kuwait damaged its airport and injured dozens of people, while

U.S. forces struck targets near the Strait of Hormuz. Diplomatic

efforts to halt the conflict showed little progress.

"The broad market and the tech sector have led this strong,

strong rally for the past several sessions, and today's taking a

breather," said Wasif Latif, chief investment officer at Sarmaya

Partners. "The headline coming out of the Middle East with the

Iran war continuing to escalate, de-escalate, escalate, and then

de-escalate again. That's the reason for the market selloff

today."

Oil prices neared $100 a barrel, with Brent crude

settling up 1.89% at $97.81.

AI HALO

Investor enthusiasm over AI continued to support equities.

In Asia, stock indexes climbed to record highs in Japan and

Taiwan.

Shares in Marvell Technology ( MRVL ) rose 3.73%, extending

gains from a record high on Tuesday after Nvidia ( NVDA ) boss

Jensen Huang called the chipmaker the next trillion-dollar

company.

SpaceX, which is largely focused on AI, plans to raise $75

billion in a blockbuster initial public offering, according to a

source familiar with the matter.

"Our view continues to be that this strong run-up in

semiconductors and data-center demand is a lot of pulling

forward of future demand and consumption, and that's helping the

economy," Latif added.

YEN INTERVENTION WORRIES

Currency markets were jittery after the dollar strengthened

to the 160 yen level, a threshold that often heightens concerns

about potential intervention by Japanese authorities.

The Japanese yen weakened 0.11% against the greenback

to 160.05 per dollar.

The fall in the yen prompted warnings from the finance minister

on Wednesday.

The euro was down 0.27% against the greenback at

$1.160.

The dollar index, which tracks the currency against

its peers, rose 0.23% to 99.52.

Markets had expected rate cuts before the Iran war, but have

now pretty much priced out U.S. rate increases this year.

In Europe, a rate increase next week is almost fully priced in

after data showed inflation accelerated last month. Traders see

roughly a 75% chance of a June hike in Japan.

U.S. 10-year Treasury yields rose 3.4 basis points to 4.489%

. Data showed U.S. private payrolls increased more

than expected in May. More comprehensive official jobs numbers

are due on Friday.

Spot gold fell 0.99% to $4,440.06 an ounce.