By Riva Gold and Aaron Kuriloff 

Shares of banks slid Monday, dragging on major indexes worldwide.

The Dow Jones Industrial Average fell 125 points, or 0.7%, to 18136. The S&P 500 fell 0.6%, and the Nasdaq Composite dropped 0.7%.

Investors sold bank shares in the U.S., Europe and Japan in the wake of recent central bank meetings that suggested easy money policies were likely to continue, with low interest rates typically hitting profits at financial firms.

Financial shares were among the biggest decliners in the S&P 500, falling 1.1% and the KBW Nasdaq Bank Index of large U.S. commercial lenders lost 1.5%. Declines in bank stocks helped push the Stoxx Europe 600 down 1.6%, following losses in Asia.

Some traders and investors said reports of capital issues at Deutsche Bank were adding to concerns about the sector. Deutsche Bank fell 7.5% to the lowest price in at least 20 years, according to FactSet.

"It's going to be tough to have a rally in the market when you hear that Deutsche Bank could be having capital issues and the stock's at all-time lows," said R.J. Grant, director of equity trading at KBW Inc.

The German lender's shares have been hit recently by fears it may need a capital increase, after The Wall Street Journal reported this month that the U.S. Justice Department proposed that Deutsche Bank pay $14 billion to settle a set of high-profile mortgage-securities probes.

The bank said Monday that it wasn't currently considering a capital increase. "The question isn't one being posed now," the bank said.

Analysts also attributed some of the losses to a local magazine report over the weekend suggesting German Chancellor Angela Merkel would rule out assistance for the lender, whose shares are down more than 50% so far this year.

Japan's Nikkei Stock Average fell 1.3% as banks and life insurance companies were hit by a speech by Bank of Japan Gov. Haruhiko Kuroda suggesting the Japanese central bank was prepared to make further cuts to short-term interest rates. Ultralow or negative interest rates erode banks' net interest margins, keeping share prices depressed.

With major central bank meetings out of the way, global investors were watching a meeting of energy producers and the U.S. presidential election.

Oil and gas companies were among the biggest decliners in Europe as major oil producers met in Algiers to discuss a possible deal on limiting production.

OPEC members and Russia have substantial issues to resolve but still expect to make progress toward a comprehensive deal, energy ministers said.

U.S. crude gained 3.4% to $46.01 a barrel in choppy trade after prices sank around 4% on Friday. Shares of energy companies in the S&P 500 rose 0.2%.

"We can't come out empty-handed," said Nourredine Bouterfa, Algeria's oil minister, warning that oil prices could drop back into the $30s if OPEC fails to come to terms this week.

Even without such a deal, some investors said stabilizing oil prices could help improve corporate earnings. Energy companies have dragged on earnings in the S&P 500, which are expected to fall for a sixth consecutive quarter, according to FactSet.

Even without a production deal, some investors said oil prices have stabilized in the range around $40 and $50 a barrel, which bodes well for energy company earnings.

"The earnings recession is in the energy sector as much as anything else and we think the energy sector is going to come out of that," said Tony Roth, chief investment officer at Wilmington Trust.

Earlier, Hong Kong's Hang Seng and the Shanghai Composite Index fell by 1.6% and 1.8%, respectively, echoing Friday's losses on Wall Street, while markets in Australia were largely flat.

The dollar fell 0.7% against the yen to Yen100.3760.

The euro gained 0.2% against the dollar to $1.1253 after data showed German business sentiment unexpectedly improved in September to its highest level since May 2014. European Central Bank President Mario Draghi is scheduled to speak later Monday.

In bond markets, the yield on 10-year German government debt fell to minus-0.113%, while the 10-year U.S. Treasury note fell slightly to 1.593%, according to Tradeweb, from 1.615% on Friday. Yields move inversely to prices.

Several investors also said they were watching tonight's U.S. presidential debate for signs that a tightening race might break toward one candidate or the other and indications of how that might affect financial markets.

A new Wall Street Journal/NBC News poll found that 34% of registered voters expect the three presidential debates to be important in helping them decide how to vote.

While stock markets have risen steadily over the summer, some investors expect the election, along with the price of oil, to trigger increased volatility in stock markets in October and November.

So far, most of the election-related volatility has been limited to movements in health-care shares and the Mexican peso, some analysts said.

Write to Riva Gold at riva.gold@wsj.com and Aaron Kuriloff at aaron.kuriloff@wsj.com

(END) Dow Jones Newswires

September 26, 2016 12:54 ET (16:54 GMT)