Asia watch: Tokyo banks fall

BANK shares in

Shares of the biggest Japanese lenders plunged as much as 5% after S&P's downbeat analysis. 'Japan's economic stagnation has evolved into a worrisome deflationary recession, with no signs of an upturn for the foreseeable future,' reported the agency.

Growing political turmoil that may stall urgent economic reforms, and plunging earnings figures from major electronics groups added to the pressure on share prices, and the Nikkei 225 dived 206.37 points to close at 9791.43.

Other Asian markets drifted as investors failed to find any inspiration in overnight strength on Wall Street and Nasdaq, which were boosted by a round of upgradings of earnings forecasts and a bright sales picture from Procter & Gamble.

The slide in Tokyo was led by a 6% dive in the stock of Mizuho Holdings, the world's largest bank ranked by assets, and other major lenders were not far behind.

An S&P official in Japan said that no immediate downgrading was planned, following a negative re-rating in November, but the possibility of action later in the year was not ruled out. The agency said in its statement that credit quality in Japan would deteriorate further in 2002, adding to the huge debt burdens which threaten to trigger an implosion of the country's financial system.

Shares of computer and component manufacturers also crashed after Thursday's doubling of its forecast losses by the NEC chip giant, and similar warnings delivered this week by rivals Toshiba and Fujitsu. NEC shares fell 8%, while Fujitsu was down 4.5% and Toshiba lost more than 3%.

Hong Kong stocks failed to hold on to early small gains as earnings worries clouded the horizon. The Hang Seng index dipped 11.38 points to 10,713.92 as leading local bank shares were sold on fears that chronic economic problems will pull down earnings this year. Bank of East Asia, the largest local bank, which is due to report next week, fell almost 2%, but HSBC Holdings was targeted by bargain-hunters and added 25 cents to HK$88.25. Major conglomerate Hutchison Whampoa fell 1.7% after warning of heavy losses on its Italian 3G mobile phone venture.

A surge in the price of Taiwanese semiconductor giant United Microelectronics failed to stave off a fall in the Weighted Average of 14.21 points to 5857.93. United jumped almost 2% on news that it was linking up with US chip group Advanced Microelectronics to build a production plant in Singapore.

Profit-taking in South Korea outweighed a 6.6% rise in Hynix Semiconductor on renewed hopes of a deal with Infineon of Germany, and the Kospi index dipped 7.21 to 740.86.

In Sydney a fall of nearly 1% in News Corporation shares pulled the All Ordinaries index down 18 points to 3386. Stocks in Malaysia and Singapore followed Wall Street's gains, the Kuala Lumpur Composite surging 8.82 points to 718.82 and the Straits Times index advancing 8.62 to 1795.51.

Thailand's SET slipped 0.12 to 340.7, and Indonesia's Jakarta Composite index put on 2.35 points to 453.99.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed in the tables.