* Nasdaq down nearly 11% from recent high, confirming

correction

* Trump delays Iran ultimatum by another 10 days

* Oil prices slip, Wall St futures bounce, but small

moves overall

* Bonds tumble as inflation fears bite, US dollar in

demand

By Stella Qiu

SYDNEY, March 27 (Reuters) - Asian stock markets were

swept up in a global rout on Friday, tracking Wall Street lower

as the threat of a protracted energy shock out of the war-torn

Middle East sent borrowing costs spiralling higher.

Investors took a modicum of 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 fell

1% to $107.07 a barrel having jumped nearly 6% overnight.

However, movement in oil prices was small and reports that

Trump was considering sending more troops only 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".

Wall Street futures bounced 0.2% in Asia. Overnight, the

Nasdaq Composite slumped 2.4% to be down nearly 11% from

its record close on October 29, confirming it has been in a

correction since then.

"The Middle East headlines won't stop for the weekend so the

weight of money leans towards assuming another risk-off week

ahead as the U.S. continues to add military resources to the

region," said ITC Markets senior FX analyst Sean Callow.

"Many see the Iranian regime as holding the upper hand and

doubt that there are indeed productive negotiations with the

U.S. in process... Underlying pressure towards higher oil

prices, USD and yields along with weaker equities appears

intact."

On Friday, MSCI's broadest index of Asia-Pacific shares

outside Japan tumbled 1.4% and was set for a

weekly drop of 3%. Japan's Nikkei skidded 1.3% and was

down 0.9% for the week.

South Korea's KOSPI plunged 3%, bringing its weekly

loss to a staggering 8.5%. Chinese blue chips fell 1%,

while Hong Kong's Hang Seng index slipped 0.4%.

Citi analysts said more severe scenarios of the Middle East

conflict could drag global growth below 2% this year, push

headline inflation beyond 4% and stoke recession risk.

"Asia, particularly Korea, Japan, and India, faces the most

intense headwinds due to heavy reliance on imported fuel and

direct exposure to disruptions in the Strait of Hormuz," they

said in a client note.

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

rose 4 basis points to 2.31%, while Australia's

benchmark 10-year yields surged 7 bps to 5.076%.

The two-year U.S. Treasury yield held steady at

3.9714% on Friday, having jumped 10 basis points overnight as

traders priced in more risk of a rate rise from the U.S. Federal

Reserve this year, which is about 50% priced in.

In currencies, the U.S. dollar was bathed in safe-haven glow

having gained for three sessions. The risk-sensitive Australian

dollar bore the brunt of market selloff, falling 0.2% to

a two-month low of $0.6872 after a 0.8% fall overnight.

The euro held at $1.1533 after slipping 0.3%

overnight, while the yen hovered at 159.70 a dollar.

Market watchers expect intervention should the yen hit 160.

Gold rose 0.6% to $4,405 an ounce after a nearly 3%

fall overnight.