IPXHY Inpex Corp (PK)

Weak oil prices and jitters about Japan's banking sector dragged down the Nikkei index in early Asian trade Wednesday, weighing on share markets across the region.

The Nikkei Stock Average traded 1.5% lower, led by drops in energy, bank and exporter stocks.

The persistent strength of the yen is also weighing on Japanese stocks, said Yip Sheung-chi Linus, chief strategist at First Shanghai Securities, calling the yen a "major focus for the Japanese market." A strong yen makes Japanese exports less competitive and diminishes profits earned overseas when remitted back home.

Japanese energy stocks also fell following an oil-price slide in the U.S. on Tuesday. Saudi Arabia's energy minister said the Organization of the Petroleum Exporting Countries wouldn't reach a deal to curb output during talks this week at an energy conference in Algiers.

Australia's S&P/ASX 200 was unchanged, but Korea's Kospi was 0.4% lower. Hong Kong's Hang Seng Index slipped 0.5%, while the Shanghai Composite declined by 0.1%. Taiwan's markets were shut due to a typhoon.

Oil prices recovered in early Asia trade, with Nymex up 27 cents at $44.94 a barrel and the international benchmark Brent higher by 34 cents at $46.31 a barrel.

That helped Japanese oil explorer Inpex Corp. narrow its losses. It was last down 0.7% from an earlier decline of 2.3%.

"Crude oil is in focus today as the U.S. API [American Petroleum Institute] will release its inventory figures and the OPEC meeting is expected to conclude," said Alex Wijaya, a senior sales trader at CMC Markets.

The fall in Japanese financial stocks followed a good run last week on the view that the Bank of Japan was rethinking its negative-rate policy, partly due to the corrosive effects on bank profits.

However, traders seem to be slowly coming to the view that negative rates continue to be a pillar of BOJ policy, and this has hurt Japan financial stocks all week. Global worries about the health of Deutsche Bank are compounding the selloff.

Mizuho Financial Group sank 1.8%, Sumitomo Mitsui Trust was down 2.3%, Dai-ichi Life Insurance tumbled 3.5% and Nomura slid 2.7%.

In the U.S., the Conference Board's consumer-confidence index rose in September to its highest level in nine years, data showed Tuesday. It was its highest level since August 2007, the start of the financial crisis that led to the 2007-09 recession.

Meanwhile, Postal Savings Bank of China's shares stayed flat from the initial public offering price on the first day of trading. The bank is China's sixth-largest lender by assets. It raised $7.4 billion in what will likely stand as the biggest IPO globally this year.

Standard Chartered shares in Hong Kong were down 2.1% following a Wall Street Journal report that the U.S. Justice Department is investigating allegations that an Indonesian power company controlled by the bank paid bribes to win contracts.

Kosaku Narioka, Jenny Hsu, Carol Chan and Joanne Chiu contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

September 27, 2016 23:45 ET (03:45 GMT)

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