GLOBAL MARKETS-Stocks pummelled on intensifying trade row, dollar wobbles

© Reuters. GLOBAL MARKETS-Stocks pummelled on intensifying trade row, dollar wobbles

* 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 .SPX and Nasdaq .IXIC suffering their steepest losses in more than two months overnight. .N

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.75 percent.

Hong Kong's Hang Seng .HSI retreated 1.2 percent, the Shanghai Composite Index .SSEC slid 1.4 percent and Japan's Nikkei shed 0.5 percent.

Equities from tech-heavy regions such as South Korea's KOSPI .KS11 and Taiwan .TWII fell 1 percent and 0.9 percent, respectively.

Taiwan Semiconductor Manfucaturing Co 2330.TW was down 1.15 percent, South Korean chipmaker SK Hynix Inc 000660.KS lost 0.8 percent and Japan's Tokyo Electron 8035.T 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. 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 .DXY 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 EUR= scaled overnight against the sagging dollar.

The U.S. currency was down 0.25 percent at 109.490 yen JPY= , 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 LCOc1 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. O/R

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 CMCU3 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 XAU= .