By Kenan Machado and Kosaku Narioka

A stronger yen and overnight declines in the U.S. weighed on Japan's Nikkei early Tuesday, with the index underperforming an otherwise positive session in Asian markets.

The Nikkei Stock Average was down 0.2%, adding to Monday's 0.1% loss, with declines led by financial and electronics stocks. The upward momentum for U.S. Treasury yields and the dollar against the yen following the U.S. election has eased in recent sessions, fueling more profit-taking pressure in the stock index.

Among key decliners, insurer Dai-ichi Life Holdings (8750.TO) was down 1.6%, Mitsubishi Electric (6503.TO) was down 1.7% and T&D Holdings (8795.TO) , another insurer, was down by 1.8%.

While a stronger local currency was a drag on Japanese markets, the yen later fell in Asian trade, with the dollar now up 0.2%.

Still, the mild declines on Monday and Tuesday show that the Japanese market's upward momentum, at least for now, appears intact, analysts say.

"There isn't a change in the market sentiment," said Yoshinori Ogawa, strategist at Okasan Securities. "Of course, there are some dips and adjustments, but trading activity isn't bad with some dip-buying kicking in."

The Nikkei's declines also come as data released Tuesday showed that consumption in the country slid 0.4% from a year earlier in October, adjusted for price changes. It was nonetheless an improvement from the 2.1% drop in September.

Elsewhere in the region, Australia's S&P/ASX 200 was up 0.3%, the Shanghai Composite Index gained 0.2% and Singapore's Straits Times Index was flat.

But despite therest of the region's modest gains, analysts warned of bearishness likely taking over soon, as political uncertainty looms in debt-laden Italy ahead of a constitutional referendum there.

"The market is going to go in a risk-off mood in a couple of days," ahead of Italy's referendum vote planned for Sunday, said Amir Anvarzadeh, global head for Japan equity sales at BGC Partners.

Overnight in the U.S., the S&P 500 closed down 0.5%, while the Dow Jones Industrial Average fell 0.3%, led by a selloff in bank stocks amid worries over Italian banks and the spillover effects on the banking sector from the referendum.

Italians are to vote on constitutional changes designed to scale back the country's legislature, speed up lawmaking and simplify bureaucracy. Investors worry that a "no" vote and the resultant political uncertainty could derail efforts to shore up the country's fragile banking system. Earlier in the year, Renzi suggested he would resign in the event of a "no" vote.

"Weaker lenders such as MPS Veneto Banca, would possibly be unable to raise fresh capital in a post-Renzi outcome," said Gary Burton, a market analyst at IG Markets.

Meanwhile, a decline in oil prices have sent oil and gas stocks lower throughout the Asia on Tuesday. Brent crude , the international benchmark, was trading down 0.5% at $48.02 a barrel in Asian trade.

Read:OPEC oil meeting: 7 things you need to know (

Among the main oil players, Australia's Woodside Petroleum (WPL.AU) and Oil (OSH.AU) ere down 0.2% and 0.9%, respectively, while Japan Petroleum (1662.TO) eclined 1.6%. In Hong Kong, shares of offshore oil producer Cnooc (0883.HK) were off 0.9%.

(END) Dow Jones Newswires

November 29, 2016 01:03 ET (06:03 GMT)

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