Asian stocks lost ground on Monday, retreating from over three-week highs as worries about a global economic downturn sapped investors' risk appetite.

Bond yields eased amid bets that a US recession would slow the Federal Reserve's aggressive tightening campaign, with markets looking for policy clues from its two-day Federal Open Market Committee meeting which begins on Tuesday.

At the same time, the dollar built on its recovery from a 2 1/2-week low against major peers, supported by demand for the US currency as a safe haven.

"Risk markets are obviously priced for some kind of slowdown, but are they priced for an outright recession? I would argue no," said Ray Attrill, head of currency strategy at National Australia Bank.

"In that sense, it's hard to say we've reached a bottom as far as risk sentiment is concerned."

Japan's Nikkei retreated 0.75 per cent, while Chinese blue chips eased 0.13 per cent.

Hong Kong's Hang Seng slid 0.45 per cent, with its tech index tumbling 1.51 per cent

MSCI's broadest index of Asia-Pacific shares lost 0.62 per cent to 158.68, after touching the highest since June 29 at 160.03 on Friday.

US. S&P 500 emini futures slipped 0.09 per cent, pointing to an extension of the benchmark's 0.93 per cent slump on Friday, when a survey showed business activity contracting for the first time in nearly two years amid persistently heated inflation and rapidly rising interest rates.

Earlier that day, data also showed euro zone business activity unexpectedly shrank.

Nasdaq futures eased 0.04 per cent, after a 1.77 per cent tumble for the tech-heavy stock index, as the bottom dropped out from under Snap Inc after the Snapchat owner posted its weakest-ever sales growth.

Investors are on guard this week for how much a strong dollar will hurt financial results from heavyweights Apple and Microsoft, among others.

The dollar index - which measures the safe-haven currency against six major peers - edged 0.1 per cent higher to 106.81, climbing further from a 2 1/2-week low of 106.10 reached on Friday.

The greenback added 0.29 per cent to 136.485 yen, while the euro slipped 0.24 per cent to $1.01875.

The 10-year US Treasury yield was little changed at 2.79 per cent after sliding from as high as 3.083 per cent over the previous two sessions.

Equivalent Japanese government bond yields dropped to the lowest since March 14 at 0.19 per cent, and Australian yields dipped to the lowest since May 31 at 3.285 per cent.

The Fed concludes a two-day meeting on Wednesday and markets are priced for a 75 basis-point rate hike, with about a 9 per cent chance of a full one percentage-point increase.

In commodities, Brent crude added 0.15 per cent, or 15 US cents, to $103.35 per barrel. Nymex light crude was slightly higher at $94.75.

Gold slipped 0.14 per cent to $1,724.05 per ounce.

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