Bond selloff pressures stocks as oil crosses $US91

Selling has driven global bond yields to major new highs as renewed fighting in the Middle East lifted oil prices above $US90 a barrel and put pressure on stock markets around the world.

The 10-year US Treasury yield, a benchmark for prices across asset classes, rose 2.2 basis points to a near 20-month top of 4.78 per cent. Japan's 10-year benchmark was closing in on three per cent, a level not seen for a generation.

US futures steadied after Wall Street indexes notched modest overnight falls but the mood was a little nervous ahead of US jobs data on Friday which could open the door to an interest rate hiking cycle starting as soon as this month.

Higher oil prices and rising US-Iran tension are stoking worries about inflation, which is negative for bonds, just as Federal Reserve Chair Kevin Warsh has reset expectations for the outlook. In a speech late last week, he signalled policymakers could move if price pressures fail to show signs of easing.

"The macro mix is turning more challenging for duration and risk assets," said Wee Khoon Chong, APAC Macro Strategist at BNY.

"Hawkish monetary policy, renewed geopolitical and inflation risks, and rising fiscal concerns are converging to maintain the upward pressure on global term premiums and long-end yields."

Japan's Nikkei dipped 0.2 per cent in early trade on Tuesday and the Hang Seng fell 0.7 per cent, with the tone set by the lacklustre debut of clothier Shein Global.

German and French long bond yields hit their highest for 15 years on Monday and bund futures made a new 15-year low in Asia trade on Tuesday while French OAT futures traded at their lowest since launching in 2012.

Brent crude futures, meanwhile, topped $US91 ($A127) a barrel in morning trade in Asia while Europe's benchmark gas price closed at a more than a three-and-a-half-year high on Monday.

Markets are pricing an interest rate hike in New Zealand on Wednesday and an increase in Europe next week. Hikes this month in the US and Japan are at better-than-even odds.

US President Donald Trump has threatened further strikes against Iran after the first exchange of fire in a month while stepped-up fighting between Russia and Ukraine has wheat prices trading close to three-year highs.

Because the rise in borrowing costs has been global, it has offered only limited support to the US dollar.

The euro was steady at $1.1619 and the yen at 159.76 to the dollar. Preliminary inflation figures are due in Europe later on Tuesday.

In Hong Kong Shein shares slipped in early trade to just below an offer price already marked down from earlier fundraising rounds.