By Kenan Machado

Oil prices also weigh on stocks

Stocks in Japan led declines across the region, dragged by weak oil prices and jitters about the health of the nation's banks.

The Nikkei Stock Average closed Wednesday down 1.3%, with energy, banking and export sectors leading losses. Korea's Kospi closed down 0.5%, the Shanghai Composite Index ended 0.3% lower, and Hong Kong's Hang Seng Index was flat.

An oil-price slide in the U.S. Tuesday (http://www.marketwatch.com/story/oil-prices-lower-after-iran-douses-hopes-for-production-deal-2016-09-27) hit Japanese energy stocks. 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 in Algiers.

Oil prices recovered slightly early Wednesday, with international benchmark Brent crude rising 0.4% to $46.17 a barrel.

Read:Crude wobbles as market faces long wait for next OPEC move on output (http://www.marketwatch.com/story/crude-higher-but-market-faces-long-wait-for-next-opec-move-on-output-2016-09-28)

That helped Japanese oil explorer Inpex Corp. (1605.TO) narrow its losses. It ended down 0.4%, after being off 2.3% earlier. Japan Petroleum Exploration Co. (1662.TO) was down 2%.

"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 idea that the Bank of Japan was rethinking negative rates, partly due to their corrosive effect on bank profits.

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

Read:5 reasons Merkel needs to rescue Deutsche Bank right now (http://www.marketwatch.com/story/5-reasons-merkel-needs-to-rescue-deutsche-bank-right-now-2016-09-28)

Mizuho Financial Group (8411.TO) (8309.TO) fell 1.8%, Sumitomo Mitsui Trust ended down 2.4%, Dai-ichi Life Insurance (8750.TO) lost 2.5% and Nomura (8604.TO) slid 2.8%.

Also weighing on Japan's Topix Index , which traded 1.4% lower, was that more than half of the index companies traded without dividend Wednesday.

The persistent strength of the yen has also weighed on Japanese stocks, said Linus Yip, 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.

The yen gained against the dollar in Asian trade Wednesday but was last trading 0.2% lower at Yen100.57 to the dollar.

Analysts had previously expected the perception that Hillary Clinton won the first U.S. presidential debate on Monday to favor risk-on trade that would help emerging markets and Asia, but that dissipated quickly.

"Outside of the currency market, you didn't see much of a reaction," said Daniel Morris, a senior investment strategist at BNP Paribas Investment Partners. In equity markets, he said, "Between the debates and the elections, the focus will be on earnings and fundamentals."

In Hong Kong, Postal Savings Bank of China's shares held at its listing price on its trading debut. The bank, China's sixth-largest by assets, raised $7.4 billion in what will likely stand as the biggest IPO globally this year. It was last trading at 4.76 Hong Kong dollars (61 U.S. cents) a share, with nearly 672 million shares changed hands.

In the fixed-income market, most Asian-Pacific government bond yields fell on Wednesday, following the lead from U.S. Treasurys as concerns over Deutsche Bank stoked demand for safe-haven assets. The yield on the benchmark 10-year Japanese government bonds fell to minus 0.090%, the lowest since Aug. 24.

(END) Dow Jones Newswires

September 28, 2016 04:48 ET (08:48 GMT)