* Brent dips below $100/bbl after Thursday's spike

* Markets see one-in-three chance of Fed rate hike next week

* Yen languishing at 40-year lows as dollar gains

* European shares inch up, but headed for weekly fall

(Updates with European trading levels)

By Stella Qiu and Shashwat Chauhan

July 24 (Reuters) - World stocks were headed for a weekly

loss and long-dated bond yields hovered around multi-decade

highs on Friday, as a near-40% rise in oil prices this month due

to the intensifying conflict in the Middle East ignited

inflation fears and expectations for rate hikes around the

globe.

MSCI's all-world index inched 0.3% lower,

headed for a second straight weekly fall. The pan-European STOXX

600 rose 0.4% after a more than 1% drop in the last

session.

Nasdaq futures dipped 0.1% despite a more than 4%

jump in chipmaker Intel ( INTC ) following bumper results. Tech

stocks have been under pressure this week as investors grow

increasingly uneasy about multi-billion-dollar spending on AI

that has yet to yield conclusive evidence of paying off.

Brent crude slipped 2% to $98.7 a barrel, after

surging 7% overnight to a two-month high of $102. Attacks by

Iran-aligned Houthis on Saudi tankers in the Red Sea risk

choking off a second crucial Middle East artery for global oil

supplies, alongside Iran's near-closure of the Strait of

Hormuz.

President Donald Trump threatened "major military

punishment" for Iran and its Houthi allies, with the U.S.

military striking Iran late Thursday and early Friday in the

13th consecutive night of attacks.

"The dollar has been going up for a few days so clearly the

risk has been building and the fact that oil has been at these

higher levels for several days has really started to work

through the cross-asset correlation," said Shaniel Ramjee,

co-head of multi-asset investment at Pictet Asset Management.

Most major currencies were steady against the dollar on

Friday, though the dollar index was on pace for its

biggest weekly jump in about a month.

News that the U.S. administration will impose higher tariffs

on goods from 60 trading partners also did not help the

inflation picture, with 30-year Treasury yields

marching towards their highest since 2007 and German 10-year

Bund yields -- the benchmark for the euro zone --

holding close to their highest since 2011.

Markets show traders believe central banks are more likely

to raise borrowing costs, with a one-in-three chance of a rate

hike from the Federal Reserve as soon as next week - a sea

change from merely a week ago - while a move in September is

more than fully priced in.

The European Central Bank left rates unchanged on Thursday,

but a September rate hike is about 70% priced in. Data on Friday

offered a more optimistic economic outlook, after surveys of

business activity showed Germany's private sector returned to

growth in July for the first time in four months and contraction

in France's private sector eased this month.

In Asia, MSCI's broadest index of Asia-Pacific shares

outside Japan dived 2.5%, with Japan's Nikkei

down 2.7% and South Korea's KOSPI tumbling 5.7%

to mark a fifth straight week of declines. Hong Kong's Hang Seng

index fell 1.7%.

Global tech stocks took a hit after Alphabet and

Tesla, the first two of the so-called "Magnificent

Seven" megacap tech companies to report this season, spooked

investors as both burned through cash in their most recent

quarter for their big spending on AI infrastructure.

"These companies are engaging in more capex and it

effectively makes the mega-cap segment of the U.S. stock market

more interest rate sensitive at a time where we see bond yields

moving up, especially real yields," Pictet's Ramjee said.

DOLLAR BUOYED BY RISING YIELDS

In bond markets, the benchmark 10-year U.S. yield

hit an over 18-month high of 4.7135%, having climbed

nearly 16 basis points this week. The yield on 30-year bonds was

steady at 5.176%, not far from a 19-year peak of 5.201%.

Higher Treasury yields helped the U.S. dollar, with the

dollar index holding at 101.4 after having hit its

highest so far this month on Thursday.

The yen was pinned near 40-year lows at 163.79 per

dollar, drawing a warning from the U.S. Treasury that excess

volatility in the currency was undesirable.

Japan's finance minister has repeatedly issued verbal

warnings about a possible intervention in the currency market,

after carrying out yen-buying operations in April and May. This

has been to little avail, given the yen has weakened well beyond

the 160 level that market participants previously viewed as a

possible catalyst for official buying.

Precious metals were steady in choppy trading, with gold

flat at $4,046 an ounce after falling 2% the day before,

while silver ticked 0.7% higher after a decline of 3.4%

on Thursday.

(Reporting by Stella Qiu in Sydney and Shashwat Chauhan in

Bengaluru; Editing by Sonali Paul, Lincoln Feast, Amanda Cooper

and Mrigank Dhaniwala)