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TOKYO (Reuters) - The U.S. dollar held gains Thursday after rebounding overnight from three-year lows following a spike in U.S. bond yields.

The yen, which tends to weaken when U.S. yields rise, slid to a fresh six-month low versus the greenback.

Government bonds, and particularly U.S. Treasuries, have become the focal point of markets globally, which have aggressively moved to price in earlier monetary tightening than signalled by the Federal Reserve and its peers.

The yen’s decline came even amid a sell-off in stocks, as the surge in yields fomented inflation worries. The yen and dollar are both traditional haven currencies.

Emerging-market and commodity-linked currencies retreated, with the Australian and Canadian dollars stepping back from three-year highs.

Cryptocurrencies also tumbled, with bitcoin sliding 5% overnight and ether dropping 9%.

“The fixed income rout is shifting into a more lethal phase for risky assets,” after initially being interpreted as a “story of improving growth expectations,” Westpac strategists wrote in a client note.

“It appears to be the case that bond markets are ‘taking on’ the central bankers’ world view, and standing in front of the current momentum is unwise.”

Bond yields have climbed this year on the outlook for massive fiscal stimulus amid continued ultra-easy monetary policy, led by the United States.

An acceleration in the pace of vaccinations globally has also bolstered what has become known as the reflation trade, referring to bets on an upswing in economic activity and prices.

In recent days though, a rise in inflation-adjusted bond yields has accelerated, indicating a growing belief that central banks may need to pare back ultra-loose policies, despite their dovish rhetoric.

The benchmark 10-year Treasury yield spiked above 1.6% overnight for the first time in a year, after an auction of $62 billion of 7-year notes was met with weak demand.

The dollar index edged up to 90.381, holding on to a 0.2% rise from Thursday, when it rebounded from losses of as much as 0.26% before the bond tender.

The greenback was little changed at 106.2 yen after earlier touching 106.43 for the first time since September. It has strengthened 2.8% after the first back-to-back monthly increases since mid-2018, putting the yen among the worst performing major currencies this year.

The Australian dollar continued its retreat after topping $0.80 on Thursday for the first time since February of 2018, declining 0.2% to 0.78525.

The Canadian dollar weakened to C$1.2613 after falling from its own three-year top to the greenback at C$1.2468 overnight.

The euro weakened 0.1% to $1.2158 after touching a seven-week high of $1.22435 on Thursday.

Bitcoin was slightly weaker Friday at $46,704, while ether slipped to $1,476.