Asian stocks hit 2-month lows as Delta variant shatters confidence

 Asian shares stumbled to two-month lows on Friday and were set for their worst weekly performance since February as confidence took a beating over the global spread of the Delta virus variant

By Swati Pandey

SYDNEY (Reuters) - Asian shares stumbled to two-month lows on Friday and were set for their worst weekly performance since February as confidence took a beating over the global spread of the Delta virus variant and worries it could stall a worldwide economic recovery. Investors flocked to the safety of bonds overnight with 10-year U.S. Treasury yields reaching levels not seen since February.

"Risk aversion is in the air," said National Australia Bank analyst Rodrigo Catril.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.9% to 667.99, a level not seen since mid-May. For the week so far, the index is down 3.2%, the biggest decline since early February.

Japan's Nikkei slid 2%. Chinese shares were weaker too with the blue-chip CSI300 index off 1.2%.

Australian shares dropped 1.6%, with stay-at-home orders in Sydney, the country's most populous city, tightened further to stop the spread of the Delta variant of the coronavirus.

Analysts said an accumulation of events has triggered a turn in sentiment rather than a single catalyst.

Fears central banks will choke economic recovery by tightening policy in their efforts to rein in inflation, a rapidly spreading Delta variant of the coronavirus around the world and still-low rates of vaccination have darkened the outlook.