Asian bonds extend global rout as oil climbs

WELLINGTON (Bloomberg) - Asian bonds fell, extending a selloff that's erased US$340 billion in value globally, and shares retreated as oil traded above US$60 a barrel.

Yields on 10-year government notes from Australia to Singapore rose at least five basis points by 10:02 a.m. in Hong Kong, after rates on Treasuries increased to an almost two-month high and German bunds slid a seventh day.

The S&P/ASX 200 Index slid 1.6 per cent in Sydney, set for its lowest close since Feb. 3, while the Kospi index in Seoul - which was closed Tuesday for a holiday - lost 1.2 per cent.

Hong Kong's Hang Seng Index climbed 0.3 per cent after plunging 1.3 per cent Tuesday. The Shanghai Composite Index added 0.4 per cent after a 4.1 per cent rout on Tuesday.

Global bond markets have tumbled since the start of last week as investors question the sustainability of rallies that pushed rates to record lows, amid signs price growth is reviving.

Oil is trading above US$60 a barrel for the first time in 2015 on prospects the biggest supply glut in 85 years is easing.

"Interest-rate expectations across most central banks are pretty fluid at the moment, which is creating more volatility in the bond markets in general," said Thomas Averill, a managing director in Sydney at Rochford Capital Pty, a currency and rates risk-management company. "There seems to be inflation concerns emerging in Europe, particularly in Germany, and that's hitting bunds. Rate hike expectations have been pushed too far out."

Ten-year Singaporean rates rose five basis points to 2.41 per cent and South Korean rates gained five basis points to 2.53 per cent.

Yields on Australian government notes due in a decade rose for a seventh day, the longest streak in four years. The rate jumped 16 basis points, or 0.16 percentage point, to 2.95 per cent, set for the highest close since Dec. 19.

Ten-year Treasuries paid 2.19 per cent and German bunds offered 0.51 per cent, up from a low of just 0.049 per cent on April 17.