* Facebook data woes lead technology shares lower

* Investors reduce position ahead of Fed's policy review

* Concerns over U.S. protectionism undermines sentiment

By Hideyuki Sano

TOKYO, March 20 (Reuters) - Asian shares fell on Tuesday as investors dumped high-flying U.S. technology shares on fears of stiffer regulation as Facebook came under fire following reports it allowed improper access to user data.

The retreat came as investors braced for new Federal Reserve Chairman Jerome Powell's first policy meeting starting later in the day and amid concerns that U.S. President Donald Trump could impose additional protectionist trade measures.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.2 percent. Japan's Nikkei fell 1.0 percent.

On Wall Street the S&P 500 lost 1.42 percent and the Nasdaq Composite 1.84 percent, both suffering their worst day in five weeks.

"Investors lightened their positions ahead of the Fed's policy meeting. The markets are completely split on whether the Fed will project three rate hikes this year or four," said Hiroaki Mino, senior strategist at Mizuho Securities.

Facebook led the losses, tumbling 6.8 percent as the social media colossus faced demands from U.S. and European lawmakers to explain how a consultancy that worked on President Donald Trump's election campaign gained improper access to data on 50 million Facebook users.

In addition, worries about the potential for a U.S.-China trade war cast a shadow after U.S. President Trump imposed tariffs on steel and aluminium and suggested punitive tariffs on some $60 billion worth of Chinese information technology, telecoms and consumer products annually.

The sharp fall in share prices put a lid on long-term U.S. bond yields while short-dated yields rose ahead of an expected rate hike from the U.S. Federal Reserve after its two-day policy meeting starting on Tuesday.

The yield on 10-year Treasuries was 2.845 percent , little changed on the week and about 10 basis points below the four-year high of 2.957 percent touched a month ago.

But the yield on two-year notes hit a 9 1/2-year high of 2.32 percent as the Fed appears set to bump up its policy interest rates to 1.50-1.75 percent from the current 1.25-1.50 percent.

But with a Fed rate rise already fully priced in, the dollar barely gained from the prospect of a rate hike.

Instead it was the euro that stole the spotlight after Reuters reported that European Central Bank officials were shifting their debate from bond purchases to the expected path of interest rates.

The euro rose to $1.2338, bouncing back from $1.2258 hit the previous day.