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Asian shares slid on Thursday as risk aversion prevailed in the market due to mounting worries over Middle East tensions, while gold prices stayed near two-month peaks with investors seeking safer assets.

MSCI's broadest index of Asia-Pacific shares outside Japan was 1.11% lower and on course for a 1.4% decline in the week. Japan's Nikkei sank 1.35%.

The broad sell-off in U.S. Treasuries continued into Asian hours with the yield on 10-year notes touching a fresh 16-year high as investors come to grips with the Federal Reserve's messaging that interest rates may stay higher for longer. Yields rise when bond prices fall.

Anderson Alves, a trader with ActivTrades, said Asian equity markets were cautious, "spurred by traders adjusting their expectations for a lesser likelihood of a rate cut, increasing long-term yields, and mounting geopolitical uncertainties."

U.S. President Joe Biden pledged to help Israel and the Palestinians during a lightning visit on Wednesday, but a deadly hospital blast that he ascribed to an errant rocket fired by Gaza militants derailed talks to prevent the war spreading.

Investor concerns of geopolitical risks after a widening U.S. chip export ban has cast a shadow over Chinese stocks despite some good news from a flurry of data on Wednesday that underscored an economy that was showing signs of stabilising.

But worries over China's property sector have kept investors jittery.

Country Garden on Wednesday was due to pay a $15 million coupon payment on a bond due September 2025, but two bondholders of China's biggest private property developer told Reuters they were yet to receive it. Non-payment would put the developer at risk of default.

"Such uncertainties could trigger defensive stances in Asia's short-term risk asset demand, especially as observers keep a vigilant eye on potential ripple effects," said Alves.

China's blue-chip stock index CSI300 fell 0.90%, while the Hang Seng Index sank 1.6% in early morning trade.

U.S. stocks ended sharply lower on Wednesday as elevated Treasury yields weighed, with investors assessing the latest batch of quarterly corporate results and forecasts.

Investors in Asia will focus on earnings from Taiwan Semiconductor Manufacturing Co Ltd later in the day when the company is expected to report a 30% slump in third-quarter profit. Analysts though predict robust growth next year as the chip industry emerges from its current downturn.

Tesla CEO Elon Musk said on Wednesday that he was concerned about the impact of high interest rates on car buyers as the company missed Wall Street expectations on third-quarter gross margin, profit and revenue.

Meanwhile, Federal Reserve policymakers are signalling a pause in hiking interest rates for another couple months.

"I believe we can wait, watch and see how the economy evolves before making definitive moves on the path of the policy rate," Fed Governor Christopher Waller told the European Economics & Financial Centre Seminar in London.

The spotlight will now be on Fed Chair Jerome Powell who is due to speak later on Thursday.

A Reuters poll of economists indicated that the Federal Reserve will keep its key interest rate on hold on Nov. 1 and may wait longer than previously thought before cutting it.

While a slight majority still see a cut before the middle of 2024, a significant minority of forecasters, around 45%, now see no rate reduction until the second half of next year or later, up from 29% in the last poll.

The yield on 10-year Treasury notes was up 5.1 basis points to 4.953%. The yield on the 30-year Treasury bond was up 3.8 basis points to 5.032%.

In currency market, the dollar index, which measures U.S. currency against six rivals, rose 0.019%. The Japanese yen strengthened 0.10% to 149.79 per dollar.

In commodities, oil prices eased on Thursday, reversing gains in the previous session, after OPEC showed no signs of supporting Iran's call for an oil embargo on Israel and as the United States plans to ease Venezuela sanctions to allow more oil to flow globally.

U.S. crude fell 0.27% to $88.08 per barrel and Brent was at $90.90, down 0.66% on the day.

Spot gold was at $1,948.16 per ounce, just shy of $1,962.39 its highest since Aug. 1 touched on Tuesday.