Asian equities broadly fell while bond yields rose as investors weighed inflation concerns and the lack of diplomatic progress in the Middle East.

Investors sold off U.S. government debt, sending Treasury yields to new highs amid mounting concerns about inflation, rising interest rates, and the nearly seven-month war with Iran.

Asian government bond yields tracked the sharp overnight gains. The 10-year Japanese government bond yield rose 8 basis points to 3.055% on Thursday, its highest level since August 1996.

The yield on 10-year Australian sovereign securities jumped 13.1 basis points to 5.391%, while that on 10-year New Zealand government debt climbed 16.1 basis points to 5.091%.

The 10-year U.S. Treasury yield rose above 5.1% on Wednesday to the highest level since 2007.

"Treasury yields moved sharply higher as strong U.S. activity data and rising energy prices reinforced concerns that inflation could prove more persistent," said Lloyd Chan, senior currency analyst at MUFG.

Readings from purchasing managers indexes in the U.S. showed business activity surged to a five-year high, although input cost inflation accelerated on supply bottlenecks, CIMB research analysts said.

"The combination of stronger U.S. growth, rising inflation risks and higher oil prices have created a toxic combination for bonds, driving yields sharply higher across the curve," MUFG's Chan added.

Asian equities were mostly lower. Taiwan's Taiex Index fell 0.6%, Hong Kong's Hang Seng Index was down 0.4% and China's Shanghai Composite Index shed 0.6%. South Korean markets were closed.

Futures tied to U.S. indexes also declined.

Japan's Nikkei Stock Average was a standout in the region, rising 1.3%, supported by chip-related stocks, as the market resumed trading after a three-day holiday.

Oil futures were lower in Asian trading, though prices remained at elevated levels. "Hopes of a near-term reopening of the Strait of Hormuz faded," ANZ Research wrote in a note.

Iranian President Masoud Pezeshkian said Wednesday that Iran is ready for negotiations to end the conflict with the U.S. but warned that Tehran will never surrender to what he called Washington's bullying, or give up its nuclear program.

Front-month West Texas Intermediate crude oil futures were down 0.8% at $91.44 as barrel, and front-month Brent crude oil futures fell 0.8% but remained above $100 a barrel, ICE data showed.