* Equities fall from Asia to U.S. with chipmakers under

pressure

* Oil prices rise with attacks escalating in Middle East

* Bond yields dip while dollar is close to flat

* Gold rises but is on track for weekly drop

(Updates prices to late U.S. morning trading)

By Sinéad Carew and Samuel Indyk

NEW YORK/LONDON, July 17 (Reuters) - Share indexes tumbled

around the world on Friday, as heavyweight chip stocks plunged

for a third consecutive day as investors reduced bets on

artificial intelligence, with China's Moonshot releasing a large

AI system.

Meanwhile oil prices rose as the United States and Iran

expanded their attacks to hit key infrastructure. The United

States struck bridges and an airport in Iran, and Tehran

responded by hitting a power and desalination plant in Kuwait.

In the contested Strait of Hormuz, where the renewed

conflict has again cut off global energy supplies, U.S. Marines

boarded a tanker, and another ship was reported to have been hit

by a projectile.

In its third straight day of losses, the Philadelphia

semiconductor index dipped to a level 23.5% below its

most recent record closing high, reached on June 22. It was last

down more than 2% on the day.

While investors were shying away due to worries about rich tech

valuations and the sustainability of AI capital spending growth,

Mona Mahajan, head of investment strategy and asset allocation

at Edward Jones, noted that energy stocks were rallying

with oil prices.

Defensive assets such as government bonds were also in

demand, along with safer equity sectors such as utilities.

"We're seeing a bit of a defensive trade take hold this morning

... and at bottom of the list of sector performance is the AI

technology part of the market," said Mahajan.

She said the sector had already risen "in a parabolic

fashion, and we know those types of trades tend to not last

indefinitely".

She also pointed to the unveiling by Chinese AI startup Moonshot

of Kimi K3, which it said was the world's largest open-weight AI

system, delivering performance close to U.S. giant Anthropic's

frontier model.

On Wall Street at 11:02 a.m. (1502 GMT) the Dow Jones Industrial

Average was down 100.93 points, or 0.19%, at 52,452.04,

the S&P 500 was down 64.07 points, or 0.85%, at 7,469.70

and the Nasdaq Composite was down 418.14 points, or

1.62%, at 25,463.81.

MSCI's gauge of stocks around the globe

fell 12.52 points, or 1.12%, to 1,109.17.

The pan-European STOXX 600 index fell 0.61%.

Losses were more severe in Asia, with MSCI's broadest index of

Asia-Pacific shares excluding Japan finishing

down 2.7%, while Japan's Nikkei tumbled 4%, putting it

12% below its recent peak.

Taiwan's stock market plunged more than 6% for its

worst day since a selloff in April 2025 related to U.S.

President Donald Trump's import tariffs.

In energy markets, U.S. crude rose 2.47% to $80.90 a

barrel and Brent rose to $86.29 per barrel, up 2.45% on

the day.

In the bond market, U.S. Treasury yields were lower after the

latest round of economic data and were poised for a weekly

decline as markets have largely priced out any chance of a rate

hike from the Federal Reserve at its policy meeting in July.

The yield on benchmark U.S. 10-year notes fell 4.36

basis points to 4.525% while the 30-year bond

yield fell 4.24 basis points to 5.0546%.

The 2-year note yield, which typically moves in step

with interest rate expectations for the Federal Reserve, fell

1.95 basis points to 4.137%.

In currencies, the dollar index, which measures the

greenback against a basket of currencies including the yen and

the euro, rose 0.03% to 100.74, with the euro down 0.01%

at $1.144.

Against the Japanese yen, the dollar strengthened 0.01%

to 162.4.

In precious metals, gold rose on Friday, but was on track for

its biggest weekly loss in six as escalating U.S.-Iran tensions

drove energy prices higher, fuelling inflation fears and

reinforcing expectations of eventual U.S. interest rate hikes.

Spot gold was up 0.74% at $3,999.49 an ounce.