* MSCI Asia-Pacific index down 0.2 pct, Nikkei loses 0.35 pct
* Asia stocks down but drop curbed after Wall St shows resilience
* Crude sags after Saudi Arabia says it can increase supply
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Shinichi Saoshiro
TOKYO, Oct 24 (Reuters) - Asian stocks edged lower on Wednesday as concerns, ranging from worries about U.S. corporate earnings to Middle East tensions, weighed on sentiment while crude oil approached two-month lows after Saudi Arabia flagged possible supply increases.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2 percent, extending the decline of more than 2 percent in the previous session.
Global stocks have suffered this week on worries about U.S. earnings, Italian government finances, U.S. trade tensions and mounting pressure on Saudi Arabia over the death of dissident journalist Jamal Khashoggi.
Saudi Arabia’s diplomatic standing looked increasingly precarious as Turkey dismissed the kingdom’s efforts to blame Khashoggi’s death on rogue operatives while U.S. President Donald Trump said Riyadh staged the “worst cover-up ever.”
Hong Kong’s Hang Seng fell 0.3 percent while the Shanghai Composite Index retreated 0.6 percent.
South Korea’s KOSPI slipped 0.25 percent and Japan’s Nikkei lost 0.35 percent, handing back earlier gains.
Equity losses in the region were modest, however, after a late round of buying helped Wall Street indexes pare most of their earlier panic-driven losses.
Wall Street’s three major indexes slumped early on Tuesday but ended well off the day’s lows as investors snapped up beaten-down shares late in the session.
“Broader market sentiment remains fragile, but as last night’s resilience by Wall Street shows, sentiment has not broken down completely,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
“We may see more bouts of ‘mini panic’ until the U.S. midterm elections, but the bottom line is that the U.S. economy is in good shape and that should prevent sentiment from breaking down.”
The dollar flagged against the yen, which is often sought in times of risk aversion. The U.S. currency was at 112.49 yen after dropping 0.35 percent overnight.
The greenback was also weighed by a decline in Treasury yields, as the recent risk aversion drove investors to safe haven government bonds. The 10-year Treasury note yield was at 3.158 percent after stooping to a three-week low of 3.111 on Tuesday.
The Canadian dollar shook off the plunge in oil and stood firm against its U.S. counterpart as investors maintained bets that the Bank of Canada (BoC) will hike interest rates later on Wednesday.
The Canadian dollar stood little changed at C$1.3083 per dollar after gaining 0.1 percent the previous day.
“We do not believe that the declines in the markets so far are enough to dissuade either the Fed or the BoC from continuing to hike interest rates, as soon as today in the case of the BoC,” wrote Carl Weinberg, chief international economist at High Frequency Economics.
“However, markets will start to rethink the need for tighter policy if global equity markets go off the rails.”
China’s yuan added to the previous day’s modest gains and rose to 6.9369 per dollar in onshore trade, continuing its modest pull-back from a near two-year low of 6.9445 marked on Monday.
The pound was little changed at $1.2976 and near a three-week trough of $1.2937 brushed overnight.
Sterling briefly gained half a percent against the dollar on Tuesday after a media report that the European Union could offer British Prime Minister Theresa May a UK-wide customs union to clinch a Brexit deal.
The pound’s strength was fleeting, however, a sign the market remains unconvinced May can successfully sell any deal to her Conservative party colleagues and get it through parliament.
The euro was steady at $1.1463 after nudging up 0.05 percent the previous day.
The dollar index against a basket of six major currencies was flat at 96.979 after posting a modest loss the previous day.
In commodities, U.S. crude futures traded at $66.41 per barrel after dropping roughly 4 percent on Tuesday to a two-month low of $65.74.
Brent crude futures traded at $76.53 per barrel after dropping more than 4 percent on Tuesday to $75.88, their lowest since Sept. 7.
Crude slid after Saudi Arabia said it could supply more crude quickly if needed, easing concerns ahead of U.S. sanctions on Iran.
The recent sell-off in global equities has also raised worries about slowing growth curbing demand for crude. (Editing by Sam Holmes)