* MSCI Asia-Pacific index down 0.75 pct, Nikkei sheds 0.5 pct
* Dollar sags as US yields decline amid risk aversion
* Libyan export woes lift oil after previous day’s big fall
By Shinichi Saoshiro
TOKYO, June 26 (Reuters) - Global stocks extended a sell-off on Tuesday as an escalating trade fight between the United States and other major economies steered investors away from riskier assets, lifting safe-haven U.S. Treasuries and keeping the dollar on the defensive.
Markets in China - the epicentre of the trade tensions with the United States - were especially hard hit. Losses across Asian equities were broad-based after Wall Street tumbled overnight, with the S&P 500 and Nasdaq suffering their steepest losses in more than two months overnight.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.75 percent.
Hong Kong’s Hang Seng retreated 1.2 percent, the Shanghai Composite Index slid 1.4 percent and Japan’s Nikkei shed 0.5 percent.
Equities from tech-heavy regions such as South Korea’s KOSPI and Taiwan fell 1 percent and 0.9 percent, respectively.
Taiwan Semiconductor Manfucaturing Co was down 1.15 percent, South Korean chipmaker SK Hynix Inc lost 0.8 percent and Japan’s Tokyo Electron was down 1 percent.
U.S. technology shares were particularly hard hit. Chipmakers which derive much of their revenue from China had taken a battering on Monday, following a report that the U.S. Treasury Department was drafting curbs that would block companies with at least 25 percent Chinese ownership from buying U.S. tech firms.
Besides the trade spat with China, the United States has recently upped the ante in a challenge to the European Union by threatening to impose tariffs on cars imported from the bloc.
“Increasingly hawkish trade rhetoric the United States is employing could begin impacting the economy by cooling investor sentiment and curbing capital expenditure by corporations,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.
“It’s turning out to be a long-term bearish factor for the financial markets, as the United States is unlikely to back down at least through its midterm elections.”
The dollar index against a basket of six major currencies stood little changed at 94.240 after dipping 0.25 percent overnight, when it fell for the fourth straight session.
The greenback was pressured as long-term U.S. Treasury yields declined to one-week lows amid the heightened risk aversion in financial markets.
The euro hovered just below an 11-day high of $1.1705 scaled overnight against the sagging dollar.
The U.S. currency was down 0.25 percent at 109.490 yen , having fallen to a two-week low of 109.365 on Monday. The yen often attracts bids in times of political tensions and market turmoil.
Brent crude oil futures were up 0.3 percent at $74.95 on the back of uncertainty over Libyan exports. The contracts had slid 1 percent overnight as receding investor risk appetite weighed on commodities.
Oil prices have seesawed after OPEC and its allies on Friday agreed to increase global supplies, albeit modestly.
Trade concerns drove copper on the London Metal Exchange down 0.3 percent to $6,734.50 per tonne, though the tense global backdrop supported gold. Spot prices for the yellow metal edged up 0.1 percent at $1,266.2 an ounce. (Reporting by Shinichi Saoshiro Editing by Shri Navaratnam)