HONG KONG, Aug 3 (Reuters) - Asian stocks were mostly negative on Tuesday as the Delta coronavirus variant spread in key markets and Chinese officials took aim at video game producers, once more rattling investor confidence in the mainland’s markets. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was flat in the afternoon session after opening in negative territory. Japan’s Nikkei was off 0.52% later on Tuesday. China’s blue chip index CSI300 opened down 0.80% but recovered some ground to be down 0.1%. Hong Kong’s Hang Seng Index fell 0.33% during the afternoon. Korean, Thai and Indian markets were higher which pushed up the MSCI index. “The volatility in the market will continue,” Suresh Tantia, Credit Suisse’s senior investment strategist. “Equities are slightly expensive and markets are looking for the next positive catalyst. Growth has reached a peak and the macro momentum is moderating. I wouldn’t be surprised to see more of a pullback in equities if that weakness continues.” Chinese tech giant Tencent Holdings Ltd was on track to fall by the most in a decade, while rival Netease Inc shed nearly 16% after Chinese state media called for curbs on the online gaming sector. Australia’s benchmark S&P/ASX200 index was off 0.38%, having reached a record high on Monday after Square Inc announced a $29 billion offer for buy-now-pay-later firm Afterpay Ltd. The Reserve Bank of Australia met expectations and kept the official cash rate on hold at a record low 0.1%. The central bank also kept the July bond tapering decision in place despite some expectations it could change due to the lockdowns in Sydney and Brisbane. In China, the spread of the Delta variant from the coast to inland cities prompted authorities to implement strict measures to bring the outbreak under control. “Millions have been locked down in China following the worst outbreak since the COVID crisis began and given risks to supply chains this might have more of an effect on the global economy,” said Elizabeth Tian, Citigroup’s equity derivative solutions director. Adding to the negative sentiment is ongoing investor concern about increasing Chinese official regulation in sectors such as technology, fintech and education. “It’s a challenging time for Asian equities with the uncertainty that has been created by the regulatory measures,” Zhikai Chen, head of Asian equities at BNP Paribas Asset Management, said. “There was some hand-holding from the China Securities Regulatory Commission (CSRC) last week to limit the spread of the contagion and counter the popular thinking of which sector is next. That worked for a few days but then we saw the flows start to reverse again. “From a global investors point of view ... there is a short-term recalibration of risk appetite.” Despite the Chinese tech sector woes, electric vehicle maker Li Auto launched its dual primary listing in Hong Kong on Tuesday that will raise up to $1.9 billion, according to its exchange filings. The Dow Jones Industrial Average fell on Monday by 0.28%, the S&P 500 lost 0.18% and the Nasdaq Composite added 0.06%. The benchmark 10-year Treasury yield was down 5.5 basis points at 1.1839% in afternoon trading, extending a pattern of declines playing out since the spring. The yield touched 1.151%, the lowest since July 20, shortly after an Institute for Supply Management report showed July U.S. manufacturing growth slowed for the second straight month. Oil weakened late on Tuesday after initially gaining in the Asian time zone following a 3.3% to 3.6% decline in the United States on Monday. Analysts said the fall was the result of investors questioning whether the Delta variant would hurt global economic growth. U.S. crude was flat to $71.26 a barrel. Brent crude was also stable at to $72.9 per barrel. Gold was slightly lower. Spot gold was trading down 0.16% $1810.45 per ounce. Reporting by Scott Murdoch in Hong Kong; Editing by Sam Holmes Our Standards: The Thomson Reuters Trust Principles.