GLOBAL MARKETS-Stocks fall, oil prices rise as Iran war escalates

* Hopes fade for Strait of Hormuz ​breakthrough

* Stocks dip, ⁠but AI hype provides support

NEW YORK, ​June 3 (Reuters) - Global equity markets fell while oil prices rose on Wednesday as hopes of a quick end to the Middle East conflict faded with ​hostilities ‌flaring up.

On Wall Street, all three indexes pulled back from recent record highs, with technology and financial shares driving losses while energy stocks led ⁠gains.

The Dow Jones Industrial Average fell 0.84%, the S&P 500 lost 0.48%, ⁠and the Nasdaq Composite fell 0.72%.

The pan-European STOXX ​600 index dipped 0.66%. MSCI's gauge of stocks across the globe fell 0.47%. Iranian attacks on Kuwait damaged its airport and injured dozens, while the U.S. military carried out strikes near the Strait of Hormuz, with diplomacy to halt the war showing little progress.

"The broad market and ​the tech ‌sector have led this strong, strong rally for the past several sessions and today's taking a breather," said Wasif Latif, chief investment officer at Sarmaya Partners.

"The headline coming out of the Middle East with the Iran war continuing to escalate, de-escalate, escalate, and then de-escalate again. That's the reason for the market selloff today."

Oil prices crept toward $100, with global benchmark Brent crude adding 1.89% to ​settle at $97.81 a barrel.

AI HALO Investor euphoria over AI underpins markets. In Asia, stock indexes climbed to record highs in Japan and ‌Taiwan. Shares in Marvell Technology were up 4.5%, extending gains from a record high in the prior session after Nvidia boss Jensen Huang called the chipmaker the next trillion-dollar company.

SpaceX — which ‌is largely focused on AI — plans to raise $75 billion in a blockbuster initial public offering, according to a source familiar with the matter.

"Our view continues to be that this strong run-up in semiconductors and data center demand is a lot of pulling forward ​of future demand and consumption, and that's helping the economy," Latif added.

YEN INTERVENTION WORRIES

Currency traders were on edge, however, after the dollar rose against the Japanese ‌yen to the 160 level at which the market tends to become nervous about intervention from authorities in Tokyo.

The Japanese yen weakened 0.09% against the greenback to 160 per dollar. The fall in the yen prompted warnings from the finance minister on Wednesday.

The euro was ⁠down 0.28% ⁠against the greenback at $1.1598.

The dollar index, which tracks the currency against its peers, rose ‌0.23% to 99.52.

Markets, which had expected rate cuts before the Iran war, have pretty much priced out U.S. rate increases this year. A hike in Europe ​next week is all but ​fully priced in following data showing inflation accelerated last month, while traders predict about a ‌75% chance of a June rise in Japan.

U.S. 10-year Treasury yields rose 3.4 basis points to 4.489% . Data showed U.S. private payrolls increased more than expected in May. More comprehensive official jobs numbers are due on Friday.

Spot gold fell 0.99% to $4,440.13 an ounce.

Marvell Technology Inc

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