Asian Markets News: Shares and bond yields sank on Friday while safe-haven currencies, gold and crude oil jumped after reports of a sharp escalation in Middle East hostilities.

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MSCI's broadest index of Asia-Pacific shares dived 2.3 per cent and U.S. stock futures pointed 1.5 per cent lower following media reports Israeli missiles had hit a site in Iran.

U.S. long-term Treasury yields dropped as much as 13.5 basis points to 4.512 per cent. The safe-haven yen rallied about 0.4 per cent against the dollar and 0.7 per cent versus the euro while the Swiss franc rallied about 0.9 per cent versus the dollar.

Gold jumped 1.3 per cent to $2,409.45, heading back toward last week's all-time high at $2,431.29.

Brent futures surged more than 3 per cent on concerns Middle East supply could be disrupted.

ABC News cited a U.S. official in reporting Israeli missiles had hit a site in Iran, while Iran's Fars news agency said explosions were heard at an airport in the city of Isafahan.

Israeli Prime Minister Benjamin Netanyahu had vowed retaliation earlier this week after Iran launched hundreds of drones and missiles in an unprecedented direct attack on Israel over the weekend.

That, in turn, was in response to a suspected Israeli strike on its embassy compound in Syria that killed senior Iranian military commanders.

"We've seen a massive risk-off move," said Khoon Goh, head of Asia research at ANZ.

"Markets will be very worried that this is the start of a tit-for-tat escalation which could create huge volatility in the Middle East."

Equity markets were already heading lower before the Middle East headlines, as more robust U.S. economic data spurred additional Federal Reserve officials to signal no rush to lower interest rates.

Chip-sector stocks were hit particularly hard by both the outlook for protracted tight monetary policy and investor disappointment at Taiwan Semiconductor Manufacturing Co's decision to leave capital spending plans unchanged.

"A triple whammy of sorts for the markets, as Fed's hawkishness keeps taking a leg up with each passing day and semiconductor earnings have so far fallen short," said Charu Chanana, head of currency strategy at Saxo.

"Risk sentiment could remain weak as we await more details on damages and casualties."