* NSE index down 0.26 pct, BSE index 0.2 pct lower
* Financial stocks drag
* Bank of Baroda falls on merger news
By Tanvi Mehta
Sept 18 (Reuters) - Indian shares were lower on Tuesday dragged by financial stocks, as sentiment across the globe turned sour amid worsened trade tensions between the U.S. and China.
Asian shares fell, and copper prices eased after Washington announced new tariffs on Chinese imports, inflaming trade tensions between the world's two biggest economies. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.3 percent. MKTS/GLOB
Statements made by the U.S. and China are keeping the market subdued and the government's recent measures to stem the rupee fall did not please investors, said Gaurang Shah, senior vice president, Geojit Financial Services.
Markets have corrected and it's only healthy, he added.
The broader NSE index .NSEI was down 0.26 percent at 11,347.85 as of 0543 GMT, dragged by top lenders ICICI Bank ICBK.NS , State Bank of India SBI.NS and HDFC Bank HDBK.NS .
The benchmark BSE index .BSESN was 0.20 percent lower at 37,509.41.
State-run Bank of Baroda Ltd BOB.NS fell as much as 14.2 percent after the government's decision to merge it with Dena Bank DENA.NS and Vijaya Bank VJBK.NS failed to enthuse investors.
While Bank of Baroda saw its steepest fall in over three years, shares of Dena Bank and Vijaya Bank rose sharply as the smaller peers are expected to benefit from the merger. Nifty PSU bank index .NIFTYPSU dropped as much as 2.8 percent to its lowest since July 26.
Some metal stocks also fell, with Vedanta Ltd VDAN.NS and Hindalco Industries Ltd HALC.NS among the top percentage losers.
Tata Motors Ltd TAMO.NS dropped 1.8 percent after unit Jaguar Land Rover said on Monday it will cut output at a UK car plant after warnings on the impact of Brexit and diesel policy. Unilever (LON:ULVR) Ltd HLL.NS rose as much as 3.3 percent after management commentary at a recent analyst meet for the company's growth boosted sentiment.