(Updates after start of European trading)

* Ceasefire strained as Iran claims Strait of Hormuz

closed

* Oil prices bounce after Wednesday's steep slide

* European shares dip after best day in 4 years

* Dollar steady ahead of US core price data

By Marc Jones and Wayne Cole

LONDON/SYDNEY, April 9 (Reuters) - Share markets sagged

on Thursday as cracks quickly began to appear in the fragile

Gulf truce, nudging oil prices back up toward $100 a barrel and

reminding investors the inflationary fallout would last a long

while yet.

Crucially, there was scant sign that the Strait of Hormuz was

open in any meaningful way, with Iran flexing its control over

the vital oil artery and demanding tolls for safe passage.

President Donald Trump took to social media to declare U.S.

forces would remain in the Gulf until a deal was reached and

complied with, otherwise the "'Shootin' Starts,' bigger, and

better, and stronger than anyone has ever seen before."

Meanwhile, Israel has carried out its heaviest strikes on

Lebanon since its conflict with Iran-backed Hezbollah militia

began last month, killing more than 250 people on Wednesday.

As a result, Brent crude futures rose 2.5% to

$97.28 a barrel, U.S. WTI futures bounced 3.3% to $97.55

and the pan-European STOXX 600 index opened 0.2% lower

having leapt 3.7% on Wednesday following the ceasefire

announcement.

UBP's Head of Investment Services UK Peter Kinsella said the

moves showed markets remained focused on trading headlines,

although apart from the big swings in oil prices, he stressed

volatility in most of the main currencies was still limited.

"It is very difficult for investors as they are dealing

with a conflict where the protagonists don't even know what they

want," Kinsella said.

SPLUTTERING GERMANY

Europe's government bond yields - which drive the cost of

borrowing - were also nudging higher again in early trading

having plunged on Wednesday.

Data from Germany showed industrial production fell

unexpectedly in February, showing Europe's largest economy was

subdued and on course for another quarter of contraction even

before the Iran war.

Overnight in Asia, Japan's Nikkei hadended 0.7%

lower after jumping 5.4% the previous session. South Korea

dipped 1.6%, following a leap of 6.8%.

Chinese blue chips also slipped 0.6%, while MSCI's

broadest index of Asia-Pacific shares outside Japan

eased 0.7%.

On Wall Street, S&P 500 futures and Nasdaq futures

were both off around 0.4% ahead of their restart later.

INFLATION IS INEVITABLE

With oil prices still around 40% higher than pre-conflict,

an inflationary spike is about to show up in the hard data

across the globe.

Figures on U.S. core prices for February due later Thursday

are expected to show a chunky 0.4% rise for a second month, and

that was before the surge in energy costs.

State Street's PriceStats' inflation metrics meanwhile show

March has seen the biggest month-on-month increase in prices

since at least 2008 when its data series began, according to its

head of Macro Strategy Michael Metcalfe.

Minutes from the Federal Reserve's last policy meeting on

Wednesday showed a growing number of members felt a rate hike

might be needed to contain inflation, though many hoped the next

move would still be a cut.

That tempered a rally in Treasuries, which proved modest

compared to the big gains seen in European debt marketson

Wednesday. Yields on U.S. 10-year notes sat at

4.296%, compared to 3.96% before the attack on Iran.

Fed fund futures imply only 6 basis points of easing for

the rest of this year, having given up on 50 basis points of

cuts since the end of February. Europe's money markets though

still, by contrast, price in at least two ECB rate hikes this

year.

"The committee broadly agreed that it was too early to act,

suggesting the Fed will likely remain on hold this year, in line

with our view," said analysts at JPMorgan in a note.

The shifting outlook for rates saw the dollar pare some of its

knee-jerk losses, with the dollar index at 99.06 and the

euro flat at $1.1660 and off its previous day's top of

$1.1721.

The dollar inched up to 158.93 yen, having fallen as

far as 157.89 at one stage on Wednesday.

In commodity markets, gold inched back to $4,713 an ounce

, after bouncing as high as $4,777 while European natural

gas prices rebounded to 45.65 euros per megawatt hour (MWh)

although the move was far more modest than in oil markets.