The Stuttgart ATP event on Sunday issued an apology to world number 78 Nick Kyrgios after an ugly racial incident during his semi-final loss to Andy Murray.

Kyrgios was insulted mid-way through what turned into a 7-6 (7/5), 6-2 loss to three-time Grand Slam winner Murray on Saturday.

Kyrgios was penalised a point and then a game for unsportsmanlike conduct early in the second set, smashing a racquet before an angry exchange with a group in the crowd.

The 27-year-old Australian, who is of Greek origin, said he had been the victim of racism.

"When is this going to stop? Dealing with racist slurs from the crowd?" Kyrgios wrote on Instagram.

"I understand that my behaviour isn't the best all the time, but 'you little black sheep' 'shut up and play' - little comments like this are not acceptable.

"When I retaliate to the crowd I get penalised. This is messed up."

Tournament bosses expressed their regrets prior to Murray's final against Wimbledon finalist Matteo Berrettini.

"We have expressed our regret to Nick Kyrgios and his team at what has happened and have assured him that we do not accept such behavior," a statement read.

"The incident is currently being investigated by those responsible."

"The ATP tournament in Stuttgart stands for creating an integrative environment for all players, coaches, visitors and employees in which discrimination - of any kind - has no place," a statement read.

"This attitude is lived by those responsible and therefore has top priority for the event, as does compliance with sporting values such as fairness, tolerance and team spirit."

"In this sense, no discriminatory statements on the part of viewers will be accepted."

Kyrgios is due to carry on in Germany next week at the Halle ATP 500 tournament.