CHICAGO, July 20 (Reuters) - Risk-off sentiment that drove Monday’s sell-off on Wall Street and rally in U.S. Treasuries widened credit spreads on corporate bonds to multi-month highs. The spread on the ICE BofA U.S. High Yield Index, a commonly used benchmark for the junk bond market, spiked from 318 basis points on Friday to 344 basis points as of the last update late Monday, its highest level since late March, according to Refinitiv data. It was also the biggest widening in a day since last June. Spreads, the interest rate premium investors demand to hold corporate debt over safer U.S. Treasuries, widened as high-yield bonds sold off a bit amid a rally in safe-haven Treasuries that sent yields to five-month lows, according to John McClain, a high yield portfolio manager at Diamond Hill Capital Management. “This was just a hiccup. We continue to believe spreads are reasonably attractive particularly compared to the rest of fixed income,” he said. For investment-grade debt, the ICE BofA U.S. Corporate Index spread rose to its highest since mid-May at 93 basis points on Monday from 91 basis points on Friday. Fears of a protracted economic recovery as Delta variant infections surged drove Wall Street indexes lower on Monday with the S&P and the Nasdaq suffering their largest one-day percentage drop since mid-May and the Dow having its worst day in nearly nine months. All three indexes were rebounding on Tuesday, while the yield on the benchmark 10-year Treasury note rose back above 1.21% from an early Tuesday low of 1.128%. The iShares iBoxx $ High Yield Corporate Bond exchange-traded fund was trading at $87.40 on Tuesday after slumping to its lowest level since May 21 on Monday at $86.98. The iShares iBoxx $ Investment Grade Corporate Bond ETF rose to as high as $136.53 in Tuesday trading, its highest level since Jan. 14. (Reporting By Karen Pierog; editing by Alden Bentley and Chizu Nomiyama) Our Standards: The Thomson Reuters Trust Principles.