* U.S. Treasury futures edge higher after global bond

rout overnight

* Traders move to price in hikes for BoE and ECB this

year; Fed seen leaving rates on hold

* Oil prices retreat; shares steady

By Rae Wee

SINGAPORE, March 20 (Reuters) - Oil prices eased on

Friday while bonds were nursing losses, after global central

bankers sounded the alarm on inflation risks stemming from the

ongoing war in the Middle East that has sent markets into a

tailspin.

Following a hectic week of monetary policy meetings across

effectively the Group of Seven (G7) nations and others, the key

takeaway for investors has been the prospect of a more

aggressive policy path.

Traders are no longer expecting a Federal Reserve rate cut

this year, a hike from the Bank of England next

month is seen as a coin toss and sources said the

European Central Bank may need to begin discussing rate

increases in April and possibly tighten policy in June

.

"There's a lot of value in the signal," said Vishnu

Varathan, Mizuho's head of macro research for Asia ex-Japan, of

the hawkish rhetoric from central banks this week.

"It's a messaging to markets that we are on top of this, you

don't need to send yields unnecessarily higher, because... the

yields are already starting to do the work for them."

A rout in global bonds pushed yields to multi-month highs on

Thursday, though the selloff abated in Asia on Friday.

Trading of cash U.S. Treasuries was closed due to a holiday

in Japan, but futures edged marginally higher.

The yield on the two-year U.S. Treasury note,

which typically reflects near-term rate expectations, had jumped

as much as over 20 basis points in the previous session.

"Probably every day that goes by without an end to the war

or clear positive steps increases the chances of that more

adverse scenario for the bond market," Thomas Mathews, head of

markets for Asia-Pacific at Capital Economics, said of the

possibility of rate hikes from major central banks by the

year-end.

For the month thus far, Germany's two-year yield

has already risen some 56 bps, while yields on two-year British

gilts have jumped 88 bps.

ENERGY CHOKEHOLD

Brent crude futures were down 3% at $105.43 a barrel

on Friday while U.S. crude fell 2.2% to $94 per barrel,

after leading European nations and Japan offered to join efforts

to secure safe passage for ships through the Strait of Hormuz

and the U.S. outlined moves to boost oil supply.

Still, both remained well above levels prior to the

U.S.-Israeli war on Iran, having risen more than 40% this month.

Natural gas prices have also soared, with those in Europe

surging as much as 35% on Thursday, as Iranian and Israeli

strikes targeted some of the Middle East's most important gas

infrastructure.

That prompted U.S. President Donald Trump to tell Israel not

to repeat its attacks on Iranian natural gas infrastructure.

"Even if the U.S. leaves (the conflict), Israel might not

leave, and there may still be some strikes and Iran will

retaliate, maybe at a lower volume," said Alicia Garcia-Herrero,

chief Asia-Pacific economist ​at Natixis.

"But this means that the Gulf will still be under

pressure... so oil prices will not go back to $60, they will

maybe stay at $90, at least until the end of the year. So the

shock is already unavoidable."

SHARES STEADY, DOLLAR FALLS

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

rose 0.18% and was set for a weekly gain of

roughly 0.7%, snapping two straight weeks of losses.

The retreat in oil prices on Friday helped stabilise the

market mood, though moves remained volatile.

Nasdaq futures rose 0.3% while S&P 500 futures

advanced 0.37%, after closing lower in the overnight cash

session. EUROSTOXX 50 futures were up 0.87%, while DAX

futures jumped 0.8%.

The dollar was meanwhile set for a weekly loss of more than

1%, as investors priced in steeper rate hikes from other

central banks this year as compared to the Fed.

The euro last bought $1.1570, having jumped 1.2% on

Thursday, while sterling was steady at $1.3424 after a

1.3% rise overnight.

Even the yen, which was on the cusp of 160 per dollar

in the previous session, found some reprieve and last stood at

157.85.

The Japanese currency was also supported by some hawkish

comments from Bank of Japan Governor Kazuo Ueda on Thursday,

after the central bank held rates steady but maintained its bias

for tighter monetary policy.

Yusuke Miyairi, Nomura's JPY FX and rates strategist, said

that while Ueda may have left the door open to a rate hike in

April, it remains "premature" to conclude that such a move would

be coming.

Elsewhere, spot gold was up 0.8% to $4,686.97 an

ounce.