GLOBAL MARKETS-Stocks, gold and oil whipsawed as Iran strikes pushes Mideast to brink

* MSCI Asia ex-Japan down 0.47%, trims losses

* Iran launches missile attacks on Iraqi bases housing U.S.

forces

* U.S. President Trump to make statement Wednesday

* Crude futures, gold up amid fears of further escalation

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Andrew Galbraith

SHANGHAI, Jan 8 (Reuters) - Financial markets were roiled on

Wednesday after Iran fired missiles at U.S. forces in Iraq,

sending Asian stocks and U.S. Treasury yields sliding and

sharply lifting oil prices as investors feared a wider conflict

in the Middle East.

Iran's missile attacks on the Ain Al-Asad air base and

another in Erbil, Iraq, early Wednesday came hours after the

funeral of an Iranian commander whose killing in a U.S. drone

strike has intensified tensions in the region. By late morning in Asia, however, equities had trimmed

losses, the yen had stabilised somewhat and U.S. bonds tempered

their rally as investors paused for breath, and as a U.S.

official said the United States was not aware of any casualties

from the strikes. "We are getting exaggerated moves but that's of course

volatility playing. Markets simply hate uncertainty. It's an old

adage but it definitely holds true in the current situation -

markets can price risks but they can't price uncertainty," said

James McGlew, executive director of corporate stockbroking at

Argonaut in Perth.

U.S. President Donald Trump said in a tweet late on Tuesday

that an assessment of casualties and damage from the strikes was

under way and that he would make a statement on Wednesday

morning.

MSCI's broadest index of Asia-Pacific shares outside Japan

.MIAPJ0000PUS was down 0.47% around 0400 GMT, having dropped

more than 1% earlier in the day. China's blue-chip CSI300 index

.CSI300 was 0.48% lower.

Japan's Nikkei .N225 was down 1.2%, also paring earlier

losses of over 2%, while Australian shares .AXJO clawed back

from a more-than-1% drop to shed just 0.14%. U.S. S&P500 e-mini

stock futures ESc1 , which had earlier dropped nearly 1.7%,

were down 0.26%.

Rob Carnell, Asia-Pacific chief economist at ING in

Singapore, said possible further escalation of tensions between

Iran and the United States could still provoke a prolonged

negative market reaction.

"If you see U.S. treasuries rallying a bit this morning,

expect them to rally quite a bit further should there be a

forceful response from the United States, which I'd imagine

there would be...from a market perspective I think this one

could run and run," he said.

The yield on benchmark 10-year U.S. Treasury notes

US10YT=RR last stood at 1.7899%, down from a U.S. close of

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1.825% on Tuesday, but up from session lows. U.S. 10-year

Treasury futures TYc1 had earlier peaked at their highest

level since November, and were last up 0.24%.

The two-year yield US2YT=RR fell to 1.5223% compared with

a U.S. close of 1.546%.

The yen, which had hit its strongest point against the

greenback since October in morning trade, gave up nearly all its

gains midday in Japan. The U.S. currency was last down just

0.06% against the yen at 108.35 JPY= .

The euro EUR= was up 0.03% to buy $1.1154 and the dollar

index .DXY , which measures the greenback against six major

peers, was 0.10% lower at 96.909.

In commodity markets, global benchmark Brent crude futures

LCOc1 shot back above $70 per dollar to their highest level

since mid-September, but were last up 1.61% at $69.37 per

barrel. U.S. crude CLc1 added 1.5% to $63.64 a barrel.

Gold also fell below a key psychological level as initial

fears eased. The precious metal was 1% higher on the spot market

XAU= at $1,590.21 per ounce, having earlier blasted through

$1,600. GOL/

Analysts said markets will be closely watching for

confirmation of any U.S. casualties from Iran's strikes.

"If it does look like we've got U.S. casualties, then I

don't think Trump is going to just stand back and take that,"

said Matt Simpson, a senior market analyst at Gain Capital in

Singapore. "World War III has been thrown around. I don't think

we're there yet. But it does look like Iraq II."

Reports of the attack threw the market off balance after

better-than-expected data in the U.S. non-manufacturing sector

helped to lift the dollar overnight.

The Institute for Supply Management said its

non-manufacturing activity index rose to 55.0 last month from

53.9 in November, indicating a faster rate of expansion.

Shares on Wall Street had nonetheless fallen on Tuesday amid

worries over U.S.-Iran tensions. The Dow Jones Industrial

Average .DJI fell 0.42%, the S&P 500 .SPX lost 0.28% and the

Nasdaq Composite .IXIC dropped 0.03%. .N

Tensions in the Middle East https://www.reuters.com/live-events/tensions-in-the-middle-east-id2917592

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