Nikkei falls as weak oil prices keep investors on edge
* Nikkei trades 8.5 pct below its 25-day moving average
* All Topix's subsectors in the red
* Market may stay sluggish until FOMC, BOJ meeting next week - traders
* Oil shares underperform hit by lower oil prices
By Ayai Tomisawa
TOKYO, Jan 20 (Reuters) - Japan's Nikkei share average fell on Wednesday morning as sliding oil prices continued to keep investors on edge, compounded by the dollar's faltering rebound.
The Nikkei dropped 1.9 percent to 16,728.98 in midmorning trade. The benchmark index is trading 8.5 percent lower than its 25-day moving average of 18,274.15. A gap of 5 percent or more indicates that the market is oversold.
U.S. crude oil wallowed at its lowest since 2003 after the world's energy watchdog warned the market could "drown in oversupply". U.S. crude futures shed another 49 cents to a new trough at $27.97 in early trade, while Brent crude was quoted at $28.76 a barrel.
The dollar's rebound has stalled, which has also sapped risk appetite. The dollar was at 117.24 yen at 0200 GMT after it had risen as far as 118.115 yen overnight. Continuación...