* Oil near 3 1/2-year high as Trump move threatens global supply
* Asian shares on defensive amid heightened geopolitical risk
* Emerging market currencies hit by prospects of higher U.S. rates
By Hideyuki Sano
TOKYO, May 9 (Reuters) - Crude oil prices jumped back to near 3 1/2-year highs on Wednesday after U.S. President Donald Trump pulled his country out of an international nuclear deal with Iran, sparking worries about global oil supplies.
Asian shares ticked down as renewed U.S. sanctions on Tehran were seen as disruptive for many companies that have deals with Iran.
Trump's move is also seen as risking worsening already-tense relations between Iran and U.S. allies in the region.
"In the very short term, it looks as if the impact of heightened geopolitical worries was limited to oil markets. But that is not the end of the story," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"U.S. sanctions could affect various industries. And tensions between Iran and Israel look set to intensify. Those will begin to cap share prices," he added.
U.S. West Texas Intermediate (WTI) crude futures traded at $70.24 per barrel, up 1.7 percent and near Monday's high of $70.84, which was its highest level since November 2014.
Brent crude futures rose 1.9 percent to $76.26 per barrel, within a whisker of its 3 1/2-year high of $76.34 set on Monday.
Iran, the third-biggest producer among the Organization of the Petroleum Exporting Countries, produces about 3.8 million barrels per day (bpd), or about 4.0 percent of the world's oil supplies.
MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.1 percent in early trade while Japan's Nikkei fell 0.4 percent.
On Wall Street caution over rising political risks was palpable. Energy shares gained 0.78 percent and defence contractor stocks rose, with Lockheed Martin up 1.3 percent and Northrop Grumman 3.3 percent.
Boeing, however, fell 0.6 percent as its deal to sell jets to Iran was seen as under threat.
The S&P500 closed down 0.03 percent, paring earlier losses of 0.65 percent. The Dow Industrial Average and Nasdaq were little changed.
Souring risk sentiment is hitting emerging markets, which have been clobbered in recent weeks by concerns about capital outflows, as the prospect of higher U.S. interest rates attracts investors back to U.S. bonds rather than riskier assets.
Countries with high perceived political risks, such as Brazil and Turkey, were among the worst hit. The Brazilian real hit near two-year low and the Turkish lira hit a record low.
Among major currencies, the risk-sensitive Australian dollar hit an 11-month low of $0.7434 and last stood at $0.7449 .
The euro hit a 4 1/2-month low of $1.1838 on Tuesday and last stood at $1.1860, having declined more than 4 percent in the past three weeks.
The currency was hit by increasing prospects of an another election in Italy as the political impasse there has continued since an inconclusive ballot in early March.
The British pound stood at $1.3548, near a 4-month low of $1.3485 touched on Tuesday.
The dollar was little changed at 109.11 yen, off its three-month high of 110.05 yen touched last week.
Reporting by Hideyuki Sano Editing by Eric Meijer