* Stock investors carefully monitor USD/JPY - traders
* Financial stocks underperform
* Inpex surges after crude priced jumped overnight
By Ayai Tomisawa
TOKYO, Sept 27 (Reuters) - Japanese stocks were down on Tuesday morning, but were off 7-1/2-week lows hit in early deals amid some volatility as Hillary Clinton and Donald Trump wound up their first U.S. presidential debate.
The dollar also bounced back from earlier losses to post gains against the yen in Asian trade, suggesting markets were judging Clinton as the winner of the debate.
At the midday break, the Nikkei was down 0.3 percent at 16,490.41, recovering from an early morning low of 16,285.41, the weakest level since Aug. 5.
The dollar was up 0.4 percent at 100.745 yen after slipping earlier to 100.085, its lowest since late August.
"Stock investors are cautiously monitoring the currency market to trade in stocks," said Chihiro Ohta, general manager at investment research and investor services at SMBC Nikko Securities.
Traders said there's heightened uncertainty over the U.S. presidential elections, which could hit Japanese shares indirectly if the dollar drops against the yen.
Markets view Clinton as the candidate of the status quo, while there are questions about what a Trump presidency might mean for U.S. foreign policy, trade and the domestic economy.
"What's most important for the Japanese market is a U.S. policy which could have a forex impact so people are sensitive to any signs suggesting a strong yen trend," said Toru Ibayashi, executive director of Wealth Management at UBS Securities in Tokyo, adding that investors will likely stay risk-averse until the Nov. 8 U.S. election.
Financials were lower, with Mitsubishi UFJ Financial Group falling 3.1 percent, Mizuho Financial Group dropping 2.4 percent and Nomura Holdings shedding 2.2 percent.
Mining stocks outperformed after crude futures climbed more than 3 percent overnight, before slipping in Asian trade.
Inpex Corp rose 1.2 percent and Japan Petroleum Exploration Co was nearly flat.
The broader Topix shed 0.5 percent to 1,329.34 and the JPX-Nikkei Index 400 declined 0.6 percent to 11,910.14.
Editing by Shri Navaratnam