(New throughout, updates prices at 1430 GMT)

NEW YORK/LONDON, April 12 (Reuters) - The U.S. dollar soared on Friday while oil prices pushed higher and gold reached a record peak as investors grappled with geopolitical tensions and potentially diverging interest rate paths between Europe and the United States.

Major U.S. stock indexes sank in early trade, as first-quarter earnings season kicked off on a dour note with reports from major banks. MSCI's gauge of stocks across the globe fell 0.7%.

Crude prices were up around 3%.

Worries that Iran might retaliate for an airstrike on its embassy in Damascus that it blamed on Israel have hovered over markets.

The United States expects an attack by Iran against Israel but one that would not be big enough to draw Washington into war, a U.S. official said late on Thursday. Israel did not claim responsibility for the airstrike on April 1.

There are "concerns that there may be an attack on Israel by Iran," said Kristina Hooper, chief global market strategist at Invesco. "That has filtered into pushing gold higher, pushing safe-haven currencies higher ... Geopolitical risk has been driving a lot of the moves."

Central bank outlooks were also in focus. The European Central Bank on Thursday signalled it could start cutting rates, while a hotter-than-expected inflation reading on Wednesday pushed back bets for the Federal Reserve's first cut until later in the year.

"In the near term it is going to be harder for the Fed to cut than for the European Central Bank," said Marcelo Carvalho, global head of economics at BNP Paribas.

In currencies, the dollar index gained 0.73%. The euro was down 0.88% and hit its lowest level in five months.

The Japanese yen strengthened 0.17% against the greenback, rebounding after hitting a 34-year low during the day as investors were on watch for signs of intervention from Tokyo officials.

On Wall Street, the Dow Jones Industrial Average fell 319.60 points, or 0.83%, to 38,139.48, the S&P 500 lost 43.16 points, or 0.84%, to 5,155.42 and the Nasdaq Composite lost 167.82 points, or 1.03%, to 16,273.65.

Investors were digesting mixed results from JP Morgan , Citigroup and Wells Fargo, with the S&P 500 Banks index down 2.4%.

Europe's STOXX 600 index rose 0.29%.

The yield on benchmark U.S. 10-year notes fell 7.5 basis points to 4.501%, from 4.576% late on Thursday.

Federal Reserve Bank of Boston President Susan Collins is eyeing a couple of interest rate cuts this year amid expectations it could still take some time to get inflation back to targeted levels.

Market pricing implied investors expect the Fed to reduce its main funds rate by about 48 basis points this year after traders started 2024 betting on about 150 bps of cuts.

Oil rose as tension in the Middle East raised the risk of supply disruptions.

U.S. crude gained 3.02% to $87.59 a barrel and Brent rose to $92.12 per barrel, up 2.66% on the day.

Spot gold added 1.77% to $2,415.15 an ounce.

(Reporting by Lewis Krauskopf in New York, Naomi Rovnick amd Kevin Buckland; Editing by David Holmes and Alison Williams)