TOKYO, April 26 (Xinhua) -- Japan's benchmark Nikkei stock index closed lower Wednesday, as financial issues sank on renewed concerns over the U.S. banking sector amid broader fears of a recession.

The 225-issue Nikkei Stock Average dropped 203.60 points, or 0.71 percent, from Tuesday to close the day at 28,416.47.

The broader Topix index, meanwhile, lost 18.25 points, or 0.89 percent, to finish at 2,023.90.

Brokers here said that concerns over the health of the U.S. banking system were reignited following reports of First Republic Bank's sharp decline in deposits.

They said that the embattled U.S. lender reported its total deposits plunged 41 percent in the first quarter, with the drop in deposits coming on the heels of the failures of Silicon Valley Bank and Signature Bank last month.

Strategists here said the San Francisco-based lender's deposits outflow was a cause for concern as other U.S. lenders could be affected and that the banking crisis has yet to be averted.

"Although the lender's deposits outflow had been anticipated, the announcement reminded investors of concerns over the banking sector, in which other regional banks could be experiencing deposit outflows as well," Yutaka Miura, senior technical analyst at Mizuho Securities Co., was quoted as saying.

The U.S. consumer confidence index dropping to a nine-month low in April added to a downbeat mood, analysts added, with the data for April released overnight contributing to the view the world's largest economy could be heading into a recession, with consumers expecting economic conditions to worsen looking ahead.

Along with the downbeat U.S. data, investment managers here said that some participants adopted a wait-and-see approach ahead of a slew of U.S. and domestic firms' profit and earnings reports due out later this week.

Some also refrained from making big bets ahead of the Bank of Japan's two-day policy-setting meeting concluding Friday, although the central bank under new governor Kazuo Ueda is widely believed to maintain its ultra-low policy, in contrast to its global peers hiking rates to tame inflation.

Financial issues retreating on contagion concerns in the United States included Sumitomo Mitsui Financial Group dropping 2.2 percent, Mizuho Financial Group losing 2.4 percent, while Mitsubishi UFJ Financial Group fell 1.9 percent.

Concordia Financial Group, meanwhile, ended the day 2.7 percent lower.

By the close of play, bank and machinery-linked issues comprised those that declined the most.

The turnover on the Prime Market on the third trading day of the week came to 2,726.74 billion yen. (20.41 billion U.S. dollars) Enditem

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