TOKYO, RAW – Global stock markets on Tuesday have been caught in the grip of contagion fears sparked by troubles at China Evergrande as growing risks the property giant could default on its massive debt prompted investors to flee riskier assets.

Selling pressure persisted in early trade in Asia ahead of a major test for Evergrande this week, which is due to pay $US83.5 million ($A115.2 million) in interest relating to its March 2022 bond on Thursday. It has another $US47.5 million ($A65.5 million) payment due on Sept. 29 for March 2024 notes.

Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.

Japan’s Nikkei fell 2.0 per cent, resuming trade after a market holiday on Monday while MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.2 per cent.

MSCI’s ACWI shed 0.13 per cent, a day after the gauge of the world’s 50 stock markets lost 1.63 per cent, its biggest decline in two months, and leaving it teetering at its lowest level in two months.

Markets in mainland China and Taiwan are still closed for a public holiday on Tuesday for mid-Autumn festival while Korean markets remain shut through Wednesday.

On Wall Street, S&P500 shed 1.70 per cent, the biggest drop in four months. Nasdaq Golden Dragon China index of US-listed Chinese shares tumbled 5.4 per cent to edge near 15-month lows hit last month.

Shares in Evergrande, which has been scrambling to raise funds to pay its many lenders, suppliers and investors, sank 10.2 per cent on Monday.

Regulators have warned that its $US305 billion ($A421 billion) of liabilities could spark broader risks to China’s financial system if its debts are not stabilised.

“Whether Evergrande can make payments, and if not, whether the authorities will bail it out? Those are the immediate questions,” said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.

Investors also fear troubles at China’s property sector, one of the key engines of the country’s stellar economic growth over decades, could have ripple effects across the global economy.

“In the longer term, we could see slower Chinese growth hurting surrounding countries,” Ichikawa said.

In the currency market, the Chinese yuan weakened to 6.4830 per dollar.

The euro traded at $US1.1726 ($A1.6171), after having touched a near-one-month low of $US1.1700 ($A1.6136) while the safe-haven yen ticked up to 109.39 yen to the dollar

The 10-year US Treasuries yield dropped to 1.312 per cent , though moves were relatively subdued as investors looked to the US Federal Reserve’s two-day policy meeting starting on Tuesday.

Investors are looking for the tapering timeline on its bond purchases as well as its board members’ long-term rates and economic projections. This week will see policy decisions from many other central banks spanning Brazil, Britain, Hungary, Indonesia, Japan, Norway, the Philippines, South Africa, Sweden, Switzerland, Taiwan and Turkey.

Oil prices also rebounded a tad in Asia after falls the previous day. US crude futures traded at $US70.68 ($A97.48) per barrel .

Waning risk appetite hit cryptocurrencies, with bitcoin slumping to a six-week low of $US42,454 ($A58,548).