Asia stocks slip, yen gains on U.S. debate jitters

SYDNEY, Sept 27 (Reuters) - Uncertainty gripped Asian markets on Tuesday as investors braced for a potentially pivotal U.S. presidential debate, shunning stocks while favouring safe-haven bonds and the yen. Early jitters saw Japan's Nikkei sink 1.4 percent to its lowest in seven weeks, while the dollar dropped to a one-month trough around 100.08 yen before steadying. A higher yen is seen as a threat to exporter sales and profits. MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.4 percent, with the technology and financial sectors both down more than 1 percent. The debate between Democrat Hillary Clinton and Republican Donald Trump starts at 0100 GMT and could have a big impact with the race seemingly so close. Markets have tended to see Clinton as the candidate of the status quo, while few are sure what a Trump presidency might mean for U.S. foreign policy, trade and the domestic economy. On Wall Street, the Dow fell 0.91 percent, while the S&P 500 lost 0.86 percent and the Nasdaq 0.91 percent. The pan-European STOXX 600 index also fell 1.6 percent to a one-week low. Big banks led the declines after Deutsche Bank slid to a record low on concerns it might need to raise more capital to meet $14 billion in U.S. fines. "There's a thing called Trump thermometer," said David Bloom, London-based global head of forex strategy at HSBC. "If you want to know who won the presidential debate, don't go to Twitter or Facebook. Just look at the dollar/Mexico peso ." The peso has hit record lows in recent days on concerns a Trump victory would threaten Mexico's exports to the United States, its single biggest market. "If Clinton wins, you will get a big rally in the peso, and reasonable rallies in emerging markets," he said, while if Trump gets the nod it should benefit safe-havens such as the yen, the euro and the Swiss franc. The dollar was shaky on Tuesday at 100.36 yen and threatening a psychological bulwark at 100.00, with the euro firm at $1.1243. Other safe-havens include U.S. Treasuries which caught a bid ahead of the debate and pushed longer-term yields to three-week lows. In commodity markets, oil ran into profit-taking having bounced 3 percent on Monday as the world's largest producers gathered in Algeria to discuss ways to tackle a crude glut that has battered prices for two years now. Brent crude eased back 45 cents to $46.90 a barrel, while U.S. crude dipped 38 cents to $45.55 per barrel.