(Adds China stocks, updates prices)

* Nikkei leads Asia markets slide, Wall St futures dip

* Oil choppy as US and Iran trade threats, deadlines

* Yields climb as markets wager on global rate rises

By Wayne Cole

SYDNEY, March 23 (Reuters) - Share markets slid in Asia

on Monday while U.S. bond yields hit eight-month peaks as the

United States and Iran traded escalating threats and Israel

planned for "weeks" more fighting, sending oil prices on another

roller-coaster ride.

Iran said on Sunday it would strike the energy and water

systems of its Gulf neighbours if U.S. President Donald Trump

followed through with a threat to hit Iran's electricity grid in

48 hours, extinguishing any hope of an early end to the war, now

in its fourth week.

Trump warned Iran had two days to fully open the vital Strait of

Hormuz, which is effectively closed for most vessels with little

prospect of naval protection for shipping.

Japan's Nikkei fell 3.8%, bringing losses for March

so far to over 13%. South Korea's market shed 5.2%,

making a 12% drop for the month.

MSCI's broadest index of Asia-Pacific shares outside Japan

lost 2.5%, while Chinese blue chips

dropped 1.9%.

Oil prices were again choppy with Brent last up 0.4% at

$112.62 a barrel, and 55% higher on the month so far. U.S. crude

gained 0.8% to $98.98.

Near-term supplies have been aided by the U.S. allowing

Iranian and Russian oil to be sold from tankers, but the growing

risk of longer-term shortages was lifting futures down the

curve. September Brent, for instance, was up $1 at $92.90

suggesting high prices were here to stay.

"The war could still go on for many weeks yet and see oil

prices rise say to $150 a barrel," said Shane Oliver, head of

investment strategy at fund manager AMP. "And the steady

destruction of energy infrastructure means it will take longer

to get supply back to normal."

"It's also worth noting that past oil shocks unfolded over

many months in terms of the rise in oil prices as the full

impact became clearer - it was over about 4 months in 1973 and a

year in 1979."

Analysts at HSBC noted Singapore jet fuel was up 175% this

year to a multi-decade high, while Asian liquefied natural gas

had climbed 130%. Bunker fuel used in shipping had blown out,

raising the cost of transporting goods, while surging fertiliser

prices will make food more expensive.

International Energy Agency boss Fatih Birol warned the

crisis was "very severe" and worse than the two oil shocks of

the 1970s put together.

SAY GOODBYE TO RATE CUTS

For Europe, EUROSTOXX 50 futures and DAX futures

both slid 1.2%, while FTSE futures fell 0.8%. On

Wall Street, S&P 500 futures dipped 0.2%, while Nasdaq

futures lost 0.3%.

The inflationary pulse from energy has seen markets abandon

hopes for further monetary easing globally and swing to pricing

in rate hikes across most developed nations.

Futures have wiped out expectations for 50 basis

points of easing from the Federal Reserve this year, with even a

small chance the next move could be up.

The hawkish sea change has hammered bonds and sent yields

climbing, adding to borrowing costs for many governments already

struggling with deficits and debt.

The prospect of higher costs and softer consumer demand has

clouded the outlook for corporate profits, while the jump in

yields made equity valuations look ever more stretched.

The energy shock, combined with pressure on fiscal budgets

from higher defence spending, saw double-digit increases in bond

yields globally last week.

Ten-year U.S. Treasury yields hit an

eight-month top of 4.4150%, having climbed a steep 44 basis

points since the war began.

The heightened volatility in markets has tended to benefit

the U.S. dollar as a store of liquidity. The U.S. is also a net

energy exporter, giving it a relative advantage over Europe and

much of Asia, which are net importers.

The euro was a shade lower at $1.1545, but some

way from major supports at $1.1409 and $1.1392.

The dollar was 0.1% firmer versus the yen at 159.50

, just off a 20-month top of 159.88, with investors

wary in case a break of 160.00 triggers intervention from Japan.

In commodity markets, gold slipped 2.6% to $4,371 an ounce

, having lost ground as investors wager on higher interest

rates globally.