TOKYO, Jan 26 - Japanese stocks closed lower on Monday, led by a slide in banks and several heavily indebted firms after a weekend report on UFJ Holdings <8307.T> hurt investor confidence in the nation's financial sector. Shares of UFJ, the most active issue by value, plunged 11.65 percent to 470,000 yen after the Nihon Keizai Shimbun business daily reported that Japan's banking watchdog would conduct stricter inspections on loans by core unit UFJ Bank. The Nikkei average <.N225> was down 0.87 percent at 10,972.60, its first close below 11,000 since January 16. The TOPIX index <.TOPX> of all first-section issues was down 0.75 percent at 1,068.85.//www.reuters.com