A pedestrian walks past an electronic board displaying Asian stock market indices in Tokyo, Japan. Picture: BLOOMBERG/TOMOHIRO OHSUMI
A pedestrian walks past an electronic board displaying Asian stock market indices in Tokyo, Japan. Picture: BLOOMBERG/TOMOHIRO OHSUMI

Tokyo — Asian stocks struggled on Tuesday as a fresh round of US-China trade tariffs and a surge in oil prices to nearly four-year highs added to worries about risks to global growth.

MSCI's broadest index of Asia-Pacific shares outside Japan edged down 0.2% but Japan's Nikkei bucked the trend and edged up nearly 0.2%.

The Shanghai composite index dropped 0.5% and Australian stocks lost 0.3%. Hong Kong markets were closed for a holiday.

China and the US imposed new tariffs on each other's goods on Monday and neither side looks to be in the mood to compromise, raising the risk of a protracted battle that could chill investment and disrupt global trade.

The Dow Jones industrial average fell about 0.7% and the S&P 500 index slipped 0.35% overnight.

The tense backdrop added to the general caution ahead of an expected interest rate hike by the Federal Reserve this week and uncertainty over the future of US deputy attorney-general Rod Rosenstein. Rosenstein oversees the special counsel investigation of Russia's role in the 2016 presidential election

The Fed begins its two-day policy meeting later on Tuesday.

US equities made strong gains last week as investors hoped the US and China would find a way out of the trade impasse.

"Wall Street weakness amid the latest flare-up in trade conflict concerns is a negative factor for equities. Some markets, like Japan's, have positive factors to fall back on like the weaker yen, but such support could be negated if the Chinese market is hit by volatility," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

In currencies, the euro shed 0.1% to $1.1736.

The single currency surged to a three-and-a-half-month peak of $1.1815 on Monday after European Central Bank chief Mario Draghi said he sees a vigorous pickup in eurozone inflation, backing moves towards unwinding an ECB asset-purchase programme meant to stimulate the economy.

Ahead of the Fed's expected rate hike, the greenback climbed to a two-month peak of ¥113 before easing to ¥112.825.

The dollar index against a basket of six major currencies edged up 0.15% to 94.320.

China's yuan was a shade weaker at 6.8637 to the dollar in onshore trade. It dipped in offshore trade on Monday, which was a holiday in mainland markets, after reports that Beijing was scrapping plans to attend trade talks this week.

The Australian dollar, a proxy of China-related trades and a gauge of broad risk appetite, was little changed at $0.7247 after shedding 0.5% on Monday.

Brent crude oil futures nudged up 0.2% to $81.32 a barrel after surging more than 3% overnight to $81.48, the highest since November 2014.

Oil prices had rallied after Opec leader Saudi Arabia and Russia, its biggest oil-producer ally outside the cartel, ruled out any immediate, additional increase in crude output. Their decision on Sunday was in effect a rebuff of US President Donald Trump's calls for action to cool the market.

"We would expect oil to trend higher in the coming weeks.... This is because Opec has essentially ignored President Trump's call to raise output to help lower prices," said Ashley Kelty, oil and gas research analyst at financial services firm Cantor Fitzgerald.

"We don't believe Opec can actually raise output significantly in the near term, as the physical spare capacity in the system is not that high," Kelty said.

Furthermore, the US will target Iran's oil exports with sanctions from November, and Washington is putting pressure on governments and companies around the world to fall in line and cut purchases from Tehran.