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TOKYO (Reuters) - Asia's share markets struggled on Wednesday as U.S. Treasury yields hit fresh two-year highs and a global technology stock sell-off unsettled investors worrying about inflation and bracing for tighter U.S. monetary policy.

Oil prices hit their highest since 2014 amid an outage on a pipeline from Iraq to Turkey and global political tensions, stoking fears of inflation becoming more persistent and propping up the dollar, which hovered near one-week highs.

MSCI's broadest index of Asia-Pacific shares outside Japan reflected the sombre tone, trading down 0.1% in mid-morning trade after closing lower for four days straight.

Australia lost half a percent, while Japan's Nikkei slid 1.8% as technology stocks fell and worries over new curbs on businesses to halt a record surge in coronavirus cases curbed risk appetite.

Shares in Sony Group slumped to their lowest level since late October, losing as much as a tenth of their value after gaming rival Microsoft said it will buy developer Activision Blizzard.

Elsewhere, South Korea's Kospi lost 0.3%, while China's blue-chip index was flat and Hong Kong's Hang Seng index bucked the downtrend to rise 0.1%.

"There's probably money rotating out of the United States as there's such a concentrated pool of capital in U.S. equities, specifically in technology companies," said Chris Weston, head of research at brokerage Pepperstone.

"You may see some of that capital redistributed."

The prospect of higher U.S. rates continued to play out in fixed income markets, with benchmark U.S. Treasury yields at fresh two-year highs.

Ten-year yields were up about 1 basis point at 1.8860% after hitting as much as 1.8900%, while five-year yields were at 1.6795%, also holding near new two-year highs recorded early in the session.

"It seems as if rates are following the typical historical pattern of increasing into the first Fed hike of the cycle," Rodigo Catril, a senior FX strategist at National Australia Bank, said in a note.

"Another surge in oil prices and ongoing repricing of Fed hike expectations are themes playing in the rates space with the U.S. dollar broadly stronger, benefiting from the combination of higher U.S. Treasury yields and spike in risk aversion," he added.

The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up at 95.760.

The Australian dollar was below its 50-day moving average at $0.71905, while sterling held steady at 1.3601.

It will be in focus later on Wednesday when British inflation figures are due, with annual headline inflation expected to reach its highest in almost a decade of 5.2%.

Oil prices rose for a fourth day as an outage on a pipeline from Iraq to Turkey added to worries about an already tight supply outlook amid geopolitical troubles involving Russia and the United Arab Emirates.

U.S. crude jumped 1.49% to $86.70 a barrel. Brent crude rose 1.30% to $88.65 per barrel. [O/R]

Gold was slightly lower. Spot gold traded at $1,812.81 per ounce. [GOL/]