By Alexander Villegas and Fabian Cambero

SANTIAGO, March 10 (Reuters) - Elected on promises of economic growth, deregulation and public spending cuts, local markets rallied after Chile elected far-right Jose Antonio Kast as president in December, but the economic tailwinds have turned turbulent as the Iran war has sent global markets into a tailspin.

While tourists and non-essential diplomats scramble to leave the Gulf as Iran retaliates across the region for US and Israeli airstrikes, many expatriates in the glittering hubs of Dubai and other Gulf cities are sitting tight.

Several told AFP that, although work and leisure routines were disrupted by the frequent launches of Iranian missiles and drones, they felt it was safe enough to stay -- and hope for a speedy end to the war.

- 'Unsettling' but 'calm' reigns -

By Ryan Patrick Jones and David Ljunggren

TORONTO/WASHINGTON, March 10 (Reuters) - Canada is increasing security around U.S. and Israeli diplomatic buildings after a shooting at the U.S. consulate in Toronto, a Canadian police official said on Tuesday.

Royal Canadian Mounted Police Chief Superintendent Chris Leather said the consulate shooting is being investigated as a "national security incident," although it's too early to determine the motive.

LONDON, March 10 (Reuters) - British warship HMS Dragon departed for the Eastern Mediterranean on Tuesday, more than a week after Britain's air base in Cyprus was attacked by a drone in the aftermath of the United States and Israel launching attacks against Iran.

Britain's government has been criticised for not being able to send a warship to the region sooner, with military vessels from allies Greece and France arriving within days of Iran launching retaliatory attacks across the Gulf.

WASHINGTON, March 10 (Reuters) - Russia has denied sharing intelligence with Iran on U.S. military assets in the Middle East,U.S. special envoy Steve Witkoff said on Tuesday in a CNBC interview.

Witkoff said the denial came during a phone call that U.S. President Donald Trump had with Russian President Vladimir Putin on Monday.

The Washington Post reported on Friday that Russia was providing Iran with targeting information that included locations of U.S. warships and aircraft in the Middle East.

By Laila Bassam

BEIRUT, March 10 (Reuters) - Lebanon's Hezbollah is applying lessons from its last war with Israel as it braces for a possible full-scale Israeli invasion and protracted conflict, returning to its roots in guerrilla warfare in south Lebanon, four Lebanese sources said.

WASHINGTON, March 10 (Reuters) - U.S. President Donald Trump's administration said it used $5.6 billion in munitions during the first two days of strikes against Iran in a report provided to U.S. congressional committees, a source familiar with the information said on Tuesday.

Members of Congress, who may soon have to approve additional funding for the war, have expressed concern that the conflict will deplete U.S. military stocks at a time when the defense industry was already struggling to keep up with demand.

WASHINGTON, March 10 (Reuters) - U.S. special envoy Steve Witkoff, a top adviser to President Donald Trump, said in a CNBC interview on Tuesday that he probably will travel to Israel next week to coordinate on Iran war plans.

(Reporting by Steve Holland and Katharine Jackson, editing by Michelle Nichols )

Shirin, a Tehran resident, was one of many who celebrated the death of Iranian supreme leader Ali Khamenei. She drank wine and danced with friends. But as the war drags on, she's begun to question its logic.

A woman in her thirties, whose identity AFP is protecting for her safety, Shirin agreed to share her feelings about the 11-day conflict as part of an attempt to gauge the feelings of critics of the Islamic republic.

Egyptians watched their everyday costs surge on Tuesday after the government raised fuel prices, blaming spiralling global energy markets due to the US-Israeli war on Iran.

Hours after price hikes of up to 30 percent were announced in the middle of the night, a Cairo market bustled with buyers and vendors fretting over vegetable prices and transport fares.

"The cost of everything is going up and up. It's been a week now that prices have already been rising," said Om Mohamed, a mother of six whose daily commute cost went up nearly 30 percent on Tuesday.