By Chandini Monnappa
BENGALURU, Feb 26 (Reuters) - Indian shares fell sharply on Friday ahead of December-quarter gross domestic product data, as a spike in global bond yields stirred up inflation worries and spooked investors across the world.
Still, both indexes were on course to end the month nearly 10% higher, thanks to solid corporate earnings and a well-received federal budget.
Overnight, U.S. Treasury yields vaulted to their highest since the pandemic began, sending MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS 2.4% lower on Friday. MKTS/GLOB
"There is nervousness due to rising yields. The overnight jump is a fresh wound and we are seeing a knee-jerk reaction," said Rusmik Oza, head of fundamental research at Kotak Securities.
Investors are now waiting for GDP data due around 1200 GMT, with a Reuters poll showing India's economy likely returned to growth in the December quarter after contracting 7.5% in the July-September period. Mumbai, a two-session rally in financial stocks was set to end, with the Nifty private bank index .NIFPVTBNK and the Nifty PSU bank index .NIFTYPSU > falling 2.9% and 2.5%, respectively.
In the last two sessions, Indian equities clocked sharp gains after overall risk appetite was boosted by dovish signals from the U.S. Federal Reserve.
Despite Friday's fall, the private bank index was set to finish February more than 13% higher.
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