* MSCI Asia-Pacific index down 0.27 pct, Nikkei sheds 0.1 pct
* Spreadbetters expect European stocks to open slightly higher
* Tech shares retreat broadly on latest US-China row
* 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) - World stocks extended a sell-off on Tuesday as escalating trade tussles between the United States and other major economies steered investors away from riskier assets, with markets in China bearing the brunt of investor anxiety.
Spreadbetters expected European shares to open slightly higher following the previous day's sharp losses, with Britain's FTSE .FCHI gaining 0.25 percent, Germany's DAX .GDAXI rising 0.35 percent and France's CAC .FCHI climbing 0.25 percent.
The tense atmosphere lifted demand for safe-haven U.S. Treasuries and kept the dollar on the defensive as financial markets worried about the wider global economic fallout of the Trump administration's "America First' agenda.
Asian equities were lower across the board after Wall Street tumbled, 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 0.27 percent.
Hong Kong's Hang Seng .HSI retreated 0.2 percent, the Shanghai Composite Index .SSEC slid 0.8 percent, and Japan's Nikkei was down 0.1 percent after trimming most of its earlier losses.
Tech-heavy indexes such as South Korea's KOSPI .KS11 and Taiwan's weighted index .TWII fell 0.45 percent and 0.55 percent, respectively.
Taiwan Semiconductor Manufacturing Co 2330.TW was down 1.8 percent, South Korean chipmaker SK Hynix Inc 000660.KS lost 1 percent and Japan's Tokyo Electron 8035.T was down 0.6 percent. Chinese tech giant Tencent Holdings 0700.HK shed 0.3 percent.
Asian tech shares slid after U.S. peers, which derive much of their sales revenue from China, took a battering overnight.
Sparking the drop in tech shares and souring broader sentiment was a report on Monday that the U.S. Treasury Department was drafting curbs that would block companies with at least 25 percent Chinese ownership from investing in U.S. tech firms. the seemingly spur-of-the-moment tweets by President Trump and the retaliatory exchange of tariffs, Washington's bid to protect intellectual property is an issue at the heart of a trade row between two powers battling for future global supremacy," wrote Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo.
Besides the trade dispute with China, the United States has recently raised the stakes in a challenge to the European Union by threatening tariffs on cars imported from the bloc.
"The 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 (in November)."
The dollar index against a basket of six major currencies dipped 0.1 percent to 94.202 .DXY and was headed for its fifth straight day of losses.
The greenback was pressured as long-term U.S. Treasury yields declined to one-week lows as prices rose on heightened risk aversion in financial markets.
The euro added to the previous day's gains and reached a near two-week high of $1.1722 EUR= .
The dollar was down 0.3 percent at 109.460 yen JPY= , having fallen to a two-week low of 109.365 on Monday. The yen often attracts safe-haven bids in times of political tension and market turmoil.
Brent crude oil futures LCOc1 were up 0.15 percent at $74.83 on uncertainty over Libya's capacity to deliver on exports commitments. Brent futures had fallen 1 percent overnight as receding investor risk appetite weighed on commodities. O/R
Oil prices were capped after OPEC and its allies on Friday agreed to increase global supplies, albeit modestly.
Trade concerns kept copper on the London Metal Exchange CMCU3 near a 2-1/2-month low of $6,702.5 per tonne brushed on Monday. Spot gold shed 0.1 percent to $1,263.62 an ounce XAU= .