HONG KONG - Asian markets lost ground on Monday, extending slides in global markets as the impasse in the war in the Middle East again drove up oil prices and spurred fears of sustained inflation even if a ceasefire holds.
The United States and Iran agreed to a truce in April but negotiations have stalled and sporadic attacks in the region have continued.
US President Donald Trump issued a new warning to Tehran on Sunday, saying it must move quickly towards a peace deal or "there won't be anything left of them".
The conflict has led to an effective blockade of the Strait of Hormuz, through which around 20 percent of global oil exports pass in peacetime.
The strait "remains meaningfully closed -- now approaching eleven weeks -- after the Trump-Xi summit in Beijing concluded without a breakthrough on reopening the waterway", MUFG's Michael Wan said Monday.
Tokyo shares closed one percent lower and Shanghai lost 0.1 percent, while Hong Kong ended down 1.1 percent.
Sydney, Taipei, Singapore and Wellington also fell, with Jakarta tumbling 3.8 percent.
But Seoul, which has renewed with record highs in recent days thanks to the artificial intelligence spending boom, ended the day 0.3 percent higher.
But government bond yields have risen worldwide in recent trading sessions as more investors start to question if inflation will begin eroding economic growth while pressuring deficits.
"Global government yields rose sharply heading into the start of this week, as three forces collided: surging oil prices, fading hopes for a Strait of Hormuz resolution, and mounting fiscal concerns especially in the UK and US," Wan said.
But last week's talks on trade between China and the United States have offered "a degree of relief for Asian markets", he added.
- AFP