Updates throughout

By Tom Westbrook and Amanda Cooper

SINGAPORE/LONDON, July 8 (Reuters) - Oil surged by over 3% on Wednesday and bond prices tumbled as renewed fighting in the Middle East and U.S. sanctions on Iranian crude threatened the ceasefire, while stocks wobbled on concerns the record AI rally may be running short on buyers.

Brent crude futures LCOc1 climbed 3.3%, the most in a day since late May, to $76.54 a barrel. While that was well shy of the peaks above $120 during the height of the fighting, it was enough to inject some fresh inflation risk into the bond market, particularly since months of conflict have drawn down global oil inventories.

"Obviously the market doesn't like these attacks ... but it's not full-blown panic mode," said Jason Wong, senior strategist at BNZ in Wellington.

The U.S. said it hit Iranian air defences, coastal surveillance and drone launch sites, and Iran's Revolutionary Guards said they targeted the U.S. military in Bahrain and Kuwait, where air raid sirens sounded on Wednesday.

Washington also moved to withdraw a concession allowing Iran to sell oil on the global market, which Iran's foreign ministry said breached the framework deal to end the war.

Benchmark 10-year U.S. Treasury note yields rose for a seventh day in a row to a one-month high of 4.56%, while in Europe, yields on German DE10YT=RR and Italian IT10YT=RR 10-year bonds also hit one-month highs at 3.04% and 3.85%, respectively.

"Just when we thought we could put the geopolitical risk premia to bed ... we were certainly reminded that this peace deal is very much still a process," said David Chao, Asia-Pacific global market strategist at Invesco in Singapore.

"I think where Brent (is) currently, it's still trading at levels that I think are not factoring in some of the continued flare-ups from the Middle East."

Data this week showed stocks of crude in the U.S. Strategic Petroleum Reserve hit their lowest level since 1983, leaving markets more vulnerable to future supply shocks.

SAMSUNG SINKS

European markets opened under pressure, with the STOXX 600 .STOXX down 0.8%, as healthcare and consumer stocks saw selling, offsetting gains in oil and gas shares. U.S. ESc1 and European STXEc1 stock futures were down 0.2% to 0.3%.

Asian markets were volatile and swung to losses with investors rattled by the sight of Samsung Electronics 005930.KS shares sliding for a second straight session, despite the company flagging a staggering 19-fold rise in profit. Analysts and investors are concerned that memory chip demand may slow in the second half of the year.

Over the last couple of weeks, there has been a distinct shift out of red-hot chip stocks and into other parts of the market, including financials, consumer stocks and back to the so-called hyperscalers that have dominated market action over the past year or so.

Samsung's results highlighted how investors are increasingly questioning valuations as bottlenecks in some parts of the AI supply chain — such as memory chips or data centres — start to clear, and pricing for AI models becomes harder to predict.

"What you could see is the market looking for exactly what the pricing power will be, and that can mean that there are fluctuations in valuations. What we also see is capex spending is — relative to EBITDA — increasing, which means that the amount of support that can be given via share buybacks and so forth is coming down. So we may see pressure on valuations in some parts of the AI chain,” said ING chief economist and global head of research, Marieke Blom.

In currency markets, the dollar held steady, leaving the euro EUR= just above $1.14 and the yen hovering around 162 JPY=, not far from 40-year lows.

Minutes from last month's Federal Reserve meeting are due later on Wednesday, and traders reckon new chair Kevin Warsh might pare back the detail to dampen any policy signal.