* Shares of energy firms fall on sliding oil prices
* Battered banks outperform
By Ayai Tomisawa
TOKYO, Feb 24 (Reuters) - Japan’s Nikkei share average stumbled to a one-week low on Wednesday morning hit by a renewed drop in oil prices while a stronger yen dragged down exporters.
Crude prices settled down more than 4 percent as Saudi Oil Minister Ali Al-Naimi effectively ruled out production cuts anytime soon. Inpex Corp fell 1.1 percent and Japan Petroleum Exploration Co shed 1.7 percent.
By 0156 GMT, the Nikkei dropped 0.4 percent to 15,986.19, after falling to as low as 15,753.77, the lowest level since Feb. 17.
Japanese equities have been volatile since the beginning of the year, with the market swayed by fluctuations in the yen and oil prices.
Analysts said investors remain on edge as they are worried the global slowdown may be more serious than expected and that the yen will continued to be favoured as markets remain risk averse.
“When the yen rises, Japanese equities are the ones to suffer selling the most as investors are worried about exporters’ earnings for the next fiscal year. Unfortunately this trend may last for a while,” said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.
When the yen rises, it will cut exporters’ profits made abroad when repatriated.
Exporters were lower, with Toyota Motor Corp dropping 0.6 percent, Honda Motor Co falling 2.5 percent and Tokyo Electron Ltd shedding 2.5 percent. The dollar was flat at 112.05 yen during Asian trade after losing 0.7 percent overnight, with mixed U.S. data and dovish comments from a U.S. Federal Reserve policymaker weighing on the dollar.
Recently battered banks outperformed. Mitsubishi UFJ Financial Group rose 2.3 percent and Sumitomo Mitsui Financial Group gained 2.1 percent.
The broader Topix dropped 0.5 percent to 1,285.27 and the JPX-Nikkei Index 400 fell 0.6 percent to 11,622.67.
Editing by Jacqueline Wong