GLOBAL MARKETS-European stocks falter, oil rises, as US strikes Iran

* Oil prices rise as U.S. strikes in ​Iran dampen ⁠peace hopes

* ECB's Isabel Schnabel signals need for rate hike, whether or not ​there is Iran peace deal

* European bond yields rise, but German 10-year yield remains near seven-week low

PARIS, May 26 (Reuters) - European stock indexes were mixed on Tuesday, pulling ​back ‌slightly from recent gains, and oil prices rose after new U.S. strikes in southern Iran dampened investors’ hopes that a U.S.-Iran peace deal could be imminent. Market sentiment ⁠had turned more positive over the past week, as traders bet on a de-escalation ⁠in the U.S.-Israel war on Iran, which has severely ​disrupted Middle East oil and gas supplies since it began in late February. But traders re-adjusted this view on Tuesday after the U.S. said on Monday that it had carried out what it called defensive strikes in southern Iran. As talks continue, U.S. Secretary of State Marco Rubio said on Tuesday ​negotiating a deal ‌with Iran could "take a few days".

At 0843 GMT, the STOXX 600 was down 0.2% on the day, but still close to its highest since the war began. London's FTSE 100 was up 0.7% on the day, while Germany's DAX was down 0.7%. The MSCI World Equity Index was flat, but up 3.8% so far this month.

Peter Schaffrik, global macro strategist at RBC Capital Markets, said that uncertainty in the Middle East was weighing on ​markets. "It went from agreement is near to everyone needs to sign the Abraham Accords to bombing, so it’s not entirely clear what’s going on there," ‌he said, referring to U.S. President Donald Trump saying on Monday that he had told additional countries to sign the Abraham Accords, as he tried to negotiate an agreement to end the war with ‌Iran. Oil prices rose, with Brent Crude futures up 3.6% on the day at $99.64 a barrel. U.S. West Texas Intermediate was down 3.7% from Friday's close, at $93.09. There was no WTI settlement on Monday due to the U.S. Memorial Day holiday.

Still, there was some underlying optimism in ​the market, Schaffrik said, as traders held on to hope that the Strait of Hormuz could reopen to traffic soon. Brent crude has come down significantly from its late-April peak ‌above $120. European traders were also weighing up comments by European Central Bank board member Isabel Schnabel, who told Reuters that the central bank should raise interest rates in June, even if ongoing peace talks with Iran yield a deal, as the conflict has been far longer than projected and high energy ⁠prices are spilling ⁠into the broader economy. Money market traders are pricing in about a 90% chance of a ‌hike at the ECB's June meeting. European bond yields rose following the U.S. strikes, but the benchmark 10-year German yield was still close to its lowest in almost seven weeks, at 2.9792%. ​Yields had fallen last week as investors ​became less concerned about the war's impact on inflation and growth. U.S. government bonds rallied as investors ‌were still hopeful about a deal to re-open the Strait of Hormuz.

The U.S. dollar was steady, with the dollar index at 99.081 and the euro down less than 0.1% on the day at $1.1636 . The dollar was up 0.2% against the Japanese yen, at 159.22 yen. Gold was down around 1.1% on the day at $4,522.5. (Reporting by Rae Wee; Editing by Muralikumar Anantharaman and Sharon Singleton)