By Willa Plank

Volatility expected ahead of OPEC meeting

Asian shares were broadly lower Monday, as traders largely gave up hope for an oil breakthrough this week and as the Bank of Japan flagged that it remained committed to negative rates.

Japan's Nikkei finished the day off 1.3%, while Hong Kong's Hang Seng Index retreated 1.6% and South Korea's Kospi slipped 0.3%.

On Friday, the S&P 500 (http://www.marketwatch.com/story/stock-futures-dip-but-sp-dow-still-on-pace-for-solid-weekly-gains-2016-09-23) fell 0.6% and the Dow Jones Industrial Average shed 0.7% as a sharp drop in oil prices hit energy stocks.

Analysts have low expectations for any breakthroughs in oil production cuts when the Organization of the Petroleum Exporting Countries gathers for an informal meeting in Algiers this week. OPEC has already failed at several attempts to impose some sort of production cap over the past year.

Read:Oil traders listen to OPEC talk, wait for action (http://www.marketwatch.com/story/oil-traders-listen-to-opec-talk-wait-for-action-2016-09-23)

"Once bitten, twice shy. We have been burned before and we are not seeing any solid evidence that this time they will agree to a deal," said Ben Le Brun, a market analyst at optionsXpress. "We are all approaching this meeting with caution."

The most likely outcome from Wednesday's OPEC meeting, said Morgan Stanley, would be a delay in any decision making until November.

Brent crude fell about 4% on Friday in New York. The impact was felt in Asia on Monday (even as the oil benchmark rose 1% during early Asian trade) with Asian energy stocks declining. Cnooc Ltd. (CEI.V) (0883.HK) was down 2.3%, China Petroleum & Chemical Corp. (600028.SH) fell 2.6% and Japanese energy exploration firms Inpex (1605.TO) and Japan Petroleum Exploration Co. (1662.TO) lost 2.3% and 2.5%, respectively.

The Malaysian ringgit was down 0.6%. The Malaysian economy is heavily dependent on oil exports.

Elsewhere, a speech by Bank of Japan Governor Haruhiko Kuroda on Monday weighed heavily on Tokyo banking and life insurance stocks. Kuroda's words strengthened concerns that the BOJ was prepared to take short-term interest rates deeper into negative territory, despite the implications for bank profits.

"Concerns about further easing are capping [previous] gains in banks and insurance stocks." said Yoshihiro Okumura, general manager of research department at Chibagin Asset Management

Sumitomo Mitsui Trust Holdings (8316.TO) finished down 1.4% and Dai-ichi Life (8750.TO) tumbled 4.9%.

The Philippine peso dropped to a seven-year low against the U.S. dollar Monday as concerns rise about political instability under President Rodrigo Duterte. Last week, Standard & Poor's ratings company said the predictability of policy-making in the Philippines has "diminished somewhat" under Duterte. The firm said it may lower the country's sovereign ratings if the reform agenda stalls or if certain economic metrics deteriorate.

It wasn't all bad news though. Australian shares finished steady following four straight sessions of gains.The S&P/ASX 200 edged up 0.1 point to 5431.4, the highest closing level since Aug. 31. A positive day for sectors including materials, property trusts and information technology was balanced by weakness among energy, financial and consumer staples stocks.

-- Kenan Machado, Kosaku Narioka, Robb M. Stewart, Saumya Vaishampayan and Jenny Hsu contributed to this article.

(END) Dow Jones Newswires

September 26, 2016 05:56 ET (09:56 GMT)