Updates prices to U.S. morning trading

By Sinéad Carew and Amanda Cooper

NEW YORK/LONDON, May 11 (Reuters) - Stocks inched higher while the dollar was little changed on Monday as investors awaited a meeting between U.S. President Donald Trump and Chinese President Xi Jinping, while oil prices rose as negotiations between the U.S. and Iran appeared to stall.

Trump on Sunday rejected Iran's response to a U.S. proposal for peace talks to end the war in the Middle East, saying Tehran's demands were "totally unacceptable."

Iranian media reported that the plan stressed the need for an end to the war on all fronts and lifting of sanctions on Tehran, along with reparations and recognition of Iran's control of the Strait of Hormuz, a vital energy conduit.

The Middle East is expected to be a key part of the agenda later this week in Trump and Xi's first face-to-face talks in more than six months, said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, adding that investors were cautiously waiting for the meeting.

"It's all about the strait and when it's going to open," said Wren. "There's some optimism that China will have some influence in resolving the strait issue."

On Wall Street at 10:58 a.m. ET (1458 GMT), the Dow Jones Industrial Average .DJI rose 22.37 points, or 0.05%, to 49,632.29, the S&P 500 .SPX rose 19.63 points, or 0.27%, to 7,418.56 and the Nasdaq Composite .IXIC rose 45.81 points, or 0.18%, to 26,293.54.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 3.23 points, or 0.29%, to 1,108.86.

The pan-European STOXX 600 .STOXX index fell 0.05%.

In currencies, the dollar retreated from earlier highs after Trump's rebuff of Iran's response kept concerns about an extended war intact.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.11% to 97.90, with the euro EUR= down 0.04% at $1.178.

Against the Japanese yen JPY=, the dollar strengthened 0.22% to 156.99.

Sterling GBP= strengthened 0.03% to $1.3636 as British Prime Minister Keir Starmer attempted to quell a rebellion within his ruling Labour party following a mauling in last week's local elections.

In energy markets, oil prices rose on supply fears as the Strait of Hormuz stayed largely closed.

U.S. crude CLc1 rose 2.35% to $97.66 a barrel and Brent LCOc1 rose to $103.80 per barrel, up 2.47% on the day.

U.S. Treasury yields edged higher on concerns about high inflation as oil prices rose.

The yield on benchmark U.S. 10-year notes US10YT=RR rose 3 basis points to 4.394%, from 4.364% late on Friday while the 30-year bond US30YT=RR yield rose 2.3 basis points to 4.9699%.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 3.1 basis points to 3.924%.

Gold prices reversed course to rise in volatile trading on Monday, as investors assessed developments in U.S.-Iran diplomacy and awaited key U.S. inflation data due later this week.

Spot gold XAU= rose 0.21% to $4,724.34 an ounce. U.S. gold futures GCc1 rose 0.15% to $4,727.70 an ounce.

Earlier, optimism over AI helped drive Chinese stocks .CSI300 up 1.6% while South Korea's chipmaker-heavy KOSPI index .KS11 rose 4.3%.

Data showed China's producer prices jumped to a near-four-year high, while consumer inflation also accelerated on elevated global energy costs.