NEW YORK, SEPT. 26 -- The Dow Jones industrial average fell almost 26 points today, taking in stride a sell-off earlier in the day in Tokyo but continuing to respond closely to oil prices, which jumped more than $1 on futures markets.

Traders said the market was uncomfortably aware of the nearly 5 percent drop in the Nikkei index but largely dismissed the news as end-of-year selling by Japanese banks trying to meet capital requirements.

In trading on the New York Mercantile Exchange, crude oil for November delivery surged $1.14 to close at $38.67 a barrel today.

Oil continued to dominate the trading. John Luvin at New Japan Securities said, "Middle East rumors were driving both the energy and the financial markets today, and although there is an attraction to bargain hunt, the extreme nervousness of the market has kept many potential buyers on the sidelines."

At the close, the Dow stood at 2459.65, down 25.99, while declines led advances on the Big Board by more than 2 to 1 on moderate volume of 155.5 million shares.

Among Dow components at the close, IBM lost 1 to 105 3/8, Chevron dipped 1 1/8 to 76, Eastman Kodak lost 1 to 39 1/8, Merck slipped 1 to 74 1/8, Procter & Gamble surrendered 1 3/8 to 72 1/8, Sears sank 1 to 25 1/2, and United Technologies fell 1 3/8 to 43 7/8.

Among Tuesday's news-making stocks, most entertainment companies reverted to narrowly mixed after broad gains following the announcement of buyout negotiations between Japan's Matsushita and MCA Inc. Although MCA closed up 7 3/4 at 61 1/4 after a late spurt, stocks that benefited from spillover speculation on Tuesday posted only small gains. Paramount edged 5/8 higher to 35 1/2, for example, while Disney gained 3/8 to 90 1/2

Conspicuous losers in today's trading included electronic-systems manufacturer Harris Corp., which skidded 4 1/8 to 21 1/8, a nearly 17 percent loss, after announcing that earnings for the first half would be down "substantially" from the $1.44 per share netted a year ago. Harris opened down 1/4 at 25 after a trading delay and kept falling. The company blamed the decline, in part, on a "rapid deterioration in domestic semiconductor markets."

Other casualties included Black and Decker, down 1 1/4 at 8 1/8, Temply-Inland among the forest-product stocks, down 1 5/8 at 25 5/8, farm-equipment giant Deere & Co., down 3 3/8 at 45 3/8, auto-parts specialist Dana Corp., down 2 5/8 at 24, and maritime outfit Sea Containers, down 3 1/8 at 41 1/8.

Also clobbered were shoemaker Nike, down 1 7/8 at 64 1/2, Great Atlantic & Pacific, down 1 7/8 at 47 3/8, and American Stores, down 2 3/8 at 52 3/8.

Drug stocks, insurance companies, money center banks, large regional banks, and savings and loans also suffered. Among the money center banks, which were hard hit on Friday and Monday but rebounded feebly on Tuesday, Chase fell 7/8 to 11 1/8, Bank of New York lost 1 1/4 to 17 1/2, Citicorp gave up 1 to 14 1/2, Manufacturers Hanover sank 1 1/8 to 21 1/4, and the three California money centers also lost ground: Wells Fargo dipped 1 7/8 to 46 3/8, Security Pacific fell 1 1/8 to 21, and First Interstate slumped 1 5/8 to 22.

The Dow transports edged 1.85 higher to 846.52 as UAL Corp. rallied 3 to 92. The utilities eased 0.82, however, slipping beneath the 200 level once again to close at 199.82.

Among broad stock indexes, the Standard & Poor's 500 was down 3.20 at 305.06, the NYSE Composite down 1.68 at 167.52, the Value Line down 2.74 at 228.22, the Amex Market Value down 3.11 at 310.06, and the Nasdaq Composite down 4.75 at 350.03.