Global Markets-asian Stocks Pare Losses as Oil Prices Dip, Wall Street Futures Rise

SYDNEY, March 27 (Reuters) - Asian shares pared losses on Friday as another delayed deadline in the Middle East war nudged oil prices lower, though there was still no end in sight to the unfolding energy crunch on the global economy.

Investors took some comfort from U.S. President Donald Trump's decision to extend his ultimatum to strike Iranian power plants by 10 days, after pushing back his initial 48-hour deadline by five days.

Brent crude futures LCOc1 slipped 0.7% to $107.23 a barrel having jumped nearly 6% overnight. Wall Street futures rallied 0.6%, after the Nasdaq Composite .IXIC slumped 2.4% overnight into correction territory. Europe's EUROSTOXX 50 futures STXEc1 rose 0.7%.

However, reports that Trump was considering sending more troops added to concern about the war escalating into a ground conflict, with no certainty that the Strait of Hormuz could be reopened to shipping soon.

Iran has dismissed a U.S. proposal to end the conflict as "one-sided and unfair".

"It is in everyone's interests for this conflict to be short," said Diana Mousina, deputy chief economist at AMP. "However, that’s not how wars often work as negotiations break down or there is a miscalculation. So it could still get worse from here."

On Friday, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was last down 0.7%, pulling back from earlier steep losses. It was, however, still down 2.3% for the week to mark the fourth straight week of declines.

Japan's Nikkei .N225 was last down 0.1%, eking out a small 0.3% rise for the week.

Chinese stocks bucked the trend, with the blue chips .CSI300 rising 0.7% and Hong Kong's Hang Seng index .HSI up 0.7%.

Sources told Reuters that Beijing is considering easing shareholding restrictions for some major investors, in a move to broaden capital-raising options for commercial banks reeling from an economic slowdown.

GLOBAL BOND YIELDS SURGE

Norway's Norges Bank was the latest central bank to flag inflation risk and interest rate hikes ahead as the war rages on. Having held policy steady on Thursday, the bank said it expected to raise rates this year, a stark contrast with its earlier forecast of three cuts by the end of 2028.

Global bond yields jumped anew after the climb in oil prices amplified inflation concern. Japan's 10-year yields JP10YTN=JBTC rose 8.5 basis points to 2.36%, while Australia's benchmark 10-year yields AU10YT=RR surged 11 bps to 5.119%.

The two-year U.S. Treasury yield US2YT=RR held steady at 3.9817% on Friday, having jumped 10 basis points overnight as traders priced in more risk of a rate rise from the U.S. Federal Reserve in September, which is about 50% priced in.

In currencies, the U.S. dollar slipped a little after three straight sessions of gains. The risk-sensitive Australian dollar AUD= edged up 0.2% to $0.6905, having hit a two-month low of $0.6872 earlier in the day.

The euro EUR= edged up 0.2% at $1.1544 after slipping 0.3% overnight, while the yen JPY= hovered at 159.61 a dollar. Market watchers expect intervention should the yen hit 160.

Even gold prices climbed 2% to $4,468 an ounce.