SYDNEY - Share markets slid in Asia on Monday while US bond yields hit eight-month peaks as the United States and Iran traded escalating threats and Israel planned for "weeks" more fighting, sending oil prices on another roller-coaster ride.

Iran said on Sunday it would strike the energy and water systems of its Gulf neighbours if US President Donald Trump followed through with a threat to hit Iran's electricity grid in 48 hours if the country failed to fully open the Strait of Hormuz.

Japan's Nikkei slid 3.9 percent, bringing losses for March so far to over 13 percent. South Korea's market shed 4.5 percent, making a 12 percent drop for the month. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.2 percent.

Oil prices were again choppy with early ⁠gains ⁠quickly fizzling out, leaving Brent down 0.2 percent at $111.90 a barrel, but still up 55 percent on the month so far. US crude was near flat at $98.35.

"The war could still go on for many weeks yet and ⁠see oil prices rise say to $150 a barrel," said Shane Oliver, head of investment strategy at fund manager AMP. "And the steady destruction of energy infrastructure means it will take longer to get supply back to normal."

"It's also worth noting that past oil shocks unfolded over many months in terms of the rise in oil prices as the full impact became clearer – it was over about 4 months in 1973 and a year in 1979."

Analysts at HSBC noted Singapore jet fuel was up 175 percent this year to a multi-decade high, while Asian liquefied natural gas had climbed 130 percent. Bunker fuel used in shipping had blown out, raising the cost of transporting goods, while surging fertilizer prices will make food more expensive.

Say goodbye to rate cuts

For Europe, EUROSTOXX 50 futures and DAX futures both slid 1.2 percent. On Wall Street, S&P 500 futures dipped 0.1 percent, while Nasdaq futures lost 0.2 percent.

The inflationary pulse from energy has seen markets abandon hopes for further monetary easing globally and swing to pricing in rate hikes across most developed nations.

Futures have wiped out expectations for 50 basis points of easing from the Federal Reserve this year, with even a small chance the next move could be up.

The hawkish sea change has hammered bonds and sent yields climbing, adding to borrowing costs for many governments already struggling with deficits and debt.

The prospect of higher costs and softer consumer demand has clouded the outlook for corporate profits, while the jump in yields made equity valuations look ever more stretched.

The energy shock, combined with pressure ⁠on fiscal budgets from higher defence spending, saw double-digit increases in bond yields globally last week.

Ten-year US Treasury yields were at an eight-month top of 4.4110 percent, having climbed a steep 44 basis points since the war began.

The heightened volatility in markets has tended to benefit the US dollar as a store of liquidity. The US is also ⁠a net energy exporter, giving it a relative advantage over Europe and much of Asia, which are net importers.

The euro was a shade lower at $1.1555, but some way from major supports at $1.1409 and $1.1392.

The dollar was flat versus the yen at 159.15, just off a 20-month top of 159.88, with investors ⁠wary in case a break of 160.00 triggers intervention from Japan.

In commodity markets, gold was 0.4 percent firmer at $4,511 an ounce, having lost ground last week as investors wager on higher interest rates globally.