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HONG KONG - Asian shares dropped on Wednesday and U.S. benchmark yields rose to a three-and-a-half month top as investors stayed jittery about inflation with oil prices reaching new multi-year highs.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3%, while Japan's Nikkei lost 0.69%.

Futures also pointed to a lower open in Europe with the pan-region Euro Stoxx 50 futures off 0.72% in early trade and FTSE futures down 0.6%. U.S. stock futures, the S&P 500 e-minis shed 0.4%.

U.S. crude rose 0.24% to $79.11 a barrel, its highest level since 2014. Brent crude gained 0.3% to $82.80 per barrel, having hit a three-year high in the previous session, driven by concerns about energy supply and a decision on Monday by the OPEC+ group of producers to stick to a planned output increase rather than raising it further. [O/R]

"OPEC’s outlook suggests further reductions in global oil stockpiles. That’s a problem given that oil inventories are already low," wrote analysts at CBA in a note.

These worries have also weighed on equity markets, with investors concerned that higher energy prices could force central banks to raise rates more quickly to react to rising inflation.

"Oil needs to come off a bit," said Dave Wang, a portfolio manager at Nuvest Capital in Singapore. "A further spike in oil will force everyone to reassess inflation assumptions."

Korea fell 0.99%, Australia 0.8%, and Hong Kong 0.3%.

New Zealand's central bank raised interest rates by 25 basis points. Although widely expected, the move still pushed the New Zealand dollar about 0.1% higher, before falling 0.45%, and also seemed to affect wider equity markets.

Investors' inflation worries also drove a sell-off in longer-dated U.S. Treasuries.

Benchmark 10-year yields rose 4.5 basis points to 1.573% during the Asia session, having climbed nearly 11 bps in three days. They were last at 1.5694%.

Yields on 20-year and 30-year Treasuries also jumped five bps or more to their highest since June. [US/]

Chinese markets remained closed for a public holiday, and shares of cash-strapped Chinese developer China Evergrande were suspended having stopped trading on Monday pending an announcement of a significant transaction.

In currency markets, the dollar gained slightly against a basket of other major currencies, supported by the rising yields, and was heading back towards a year high hit last month. The euro stayed near its 14-month low struck last week.

Spot gold shed 0.48% to $1751.4 an ounce, with the non-interest bearing asset hurt by higher yields. [GOL/]

(Additional reporting by Tom Westbrook in Singapore; Editing by Stephen Coates)