TREASURIES-US bonds rally on reports of Middle East missile strike

SINGAPORE, April 19 (Reuters) - U.S. Treasuries rallied sharply as news reports of explosions in Iran and a possible Israeli missile strike sent investors scurrying into safe assets in Friday morning Asia trade.

Benchmark 10-year yields fell more than 10 basis points to 4.5384%, recouping much of the week's selling. Two-year yields dropped 9 bps to 4.8985%.

Yields fall when bond prices rise.

Iran's Fars news agency said explosions were heard near the airport at the country's central Isfahan city. Israeli missiles hit a site in Iran, ABC News reported, citing a U.S. official.

"It's a haven trade," said Mizuho's chief economist for Asia outside Japan, Vishnu Varathan in Singapore.

"The Treasury move can also be explained because it's not just tactical, it's fear and fear tends to have an impact on growth and demand."

Oil, gold and the dollar rose sharply in other markets and sovereign bonds around Asia rallied. Ten-year Japanese government bond yields dropped four bps in their sharpest fall for the year so far. (Reporting by Tom Westbrook Editing by Shri Navaratnam)