TOKYO, June 14 (Reuters) - Japan's Nikkei index sank 2% on Tuesday as investors continued to fret about the possibility of more aggressive policy tightening by the U.S. Federal Reserve, with sentiment further dented by COVID-19 control measures in China.

The Nikkei dropped to 26,446.82 as of the midday break. The index was on course for a third straight day of decline after having hit its lowest since May 19. Of the benchmark's 225 components, 194 fell.

The broader Topix slid 1.55% to 1,871.52.

Beijing is testing millions to stem the spread from a cluster infection at a 24-hour bar, with China's vice premier saying COVID-19 prevention and control needs to be strengthened. Shanghai is only just emerging from a crippling two-month-long lockdown.

"The reimposition of restrictions in Beijing, Shanghai and other places is sparking worries of new supply chain disruptions," said Kazuo Kamitani, a strategist at Nomura Securities.

Meanwhile, investors are seen bracing for 150 basis points of rate hikes over two meetings by the Fed — one that ends on Wednesday and one in the following month. This is after data on Friday showed U.S. consumer price inflation ran red hot.

Wall Street confirmed a bear market overnight, with the S&P 500 dropping 3.88% on the day and down more than 20% from its most recent closing high. The tech-heavy Nasdaq tumbled 4.6%.

"Compared to the selloff in U.S. stocks, the decline in Japanese shares is not as deep as you might expect," said a market participant at a domestic asset management firm.

Tech was among the Nikkei's worst performing sectors though, down 2.39%. Healthcare dropped 2.55%, while real estate slumped the most, down 3.05%.

Financials were the only sector to rise, eking out a 0.18% gain amid higher bond yields.

Chip-making equipment maker Tokyo Electron sank 2.84%, and was the Nikkei's biggest drag, shaving off 53 index points.

Uniqlo store operator Fast Retailing and startup investor SoftBank Group each knocked 39 index points off the benchmark, with repective declines of 1.65% and 3.54%.

Travel-related stocks took a hit, with airlines ANA Holdings off 3.71% and Japan Airlines down 3.6%. (Reporting by Tokyo markets team)