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By Kevin Buckland
TOKYO, Sept 19 (Reuters) - Asian shares sank on Tuesday, as worries about the Chinese property sector weighed on markets from Hong Kong to Australia, while Japanese investors sold chip stocks on their return from a holiday-extended weekend.
Benchmark U.S. Treasury yields hovered near 16-year peaks and the dollar held close to six-month highs as traders braced for a Federal Reserve rate decision on Wednesday, in a week that also sees policy decisions from the Bank of Japan and Bank of England, among others.
Crude oil continued its rally amid tighter supply, stoking worries about stagflation.
MSCI's broadest index of Asia-Pacific shares slipped 0.3%.
Japan's Nikkei tumbled 1.1% under the weight of big losses for chip-related stocks including Tokyo Electron and Advantest.
Japanese markets were closed Monday, when Asian tech stocks sold off following a Reuters report that TSMC had asked its major vendors to delay deliveries.
John Pearce, CIO at Unisuper, called the news "surprising."
"The one thing you were almost certain of was that demand for semiconductors was only one way," he said.
At the same time, "there's enough lead indicators there to say there's real softness in the pipeline," he added.
Hong Kong's Hang Seng declined 0.3%, with a subindex of tech stocks sliding 0.7%.
Chinese property stocks were volatile, with a subindex of Hang Seng developers dropping as much as 1.2% at one point, although it was last off 0.2%.
In one positive development, Country Garden won approval from creditors to extend repayment on another onshore bond, the last in the batch of eight bonds it has been seeking extensions for, sources said. The stock climbed about 1%.
Property services provider Country Garden Services Holdings , though, was among the worst performers on the Hang Seng, dropping about 2%.
An index of mainland blue chips fell 0.4%, while a subindex of property stocks was flat.
Australia's stock benchmark dropped 0.4%, sagging under the weight of mining stocks amid pessimism over Chinese demand.
Weakness in Asia came despite small gains for Wall Street overnight, with U.S. stock futures flat.
Currency markets were also subdued, with the U.S. dollar index - which measures the currency against six major peers - rising 0.06% to 105.14, edging back toward last week's six-month peak of 105.43.
The dollar added 0.1% to 147.73 yen, bringing it closer to last week's 10-month top of 147.95.
The euro eased 0.07% to $1.06825.
Ten-year yields were little changed at just above 4.3%, holding close to the 4.366% level reached on Aug. 22, which was the highest since 2007.