Banks lead Tokyo tumble on Resona

BANKING stocks led the retreat in

The reports sparked fears that there could soon be a slab of Resona shares up for sale, depressing the price. Resona, which has enjoyed a roller-coaster ride, shed 19 yen, or 12.7%, to 171 yen. After the rescue, the government controls about 70% of the bank.

Other lenders were caught in the sell-off, with additional pressure coming from speculation among investors that Sunday's reduced election win for the government would presage more aggressive banking sector reform.

Mizuho Financial nosedived 17,000 yen, or 7.2%, to 220,000 yen, Sumitomo Mitsui Financial gave up 27,000 yen, or 5.5%, to 464,000 yen, and UFJ rounded out the gloomy picture, trading at 390,000 yen, lower by 25,000 yen or 6%.

The lenders - including Resona - have been on a roll in recent months as investors staked out aggressive positions in the hope that the sector would be well placed for gains as the wider economy improved.

In recent months, Resona had said that it wanted to buy back the State's holding piecemeal over the next 15 years using a portion of its profits to roll back the stake gradually. Now it seems that the government may well want a speedier exit and is looking to sell its shares into the market. Tech shares took a thumping as investors locked in profits, while leading exporters found themselves in the firing line amid revived concern that the dollar is set to renew its swoon against the yen, pressuring bottom lines.

Advantest slid 440 yen, or 4.2%, to 8050 yen, Tokyo Electron descended 490 yen, or 5.6%, to 7890 yen, and Fujitsu dropped 30 yen, or 4.6%, to 626. Among the exporters, consumer products group Sony fell 80 yen, or 2%, to 3920 yen, while rival Matsushita Electric Industrial dropped 42 yen, or 2.8%, to 1465 yen.

Taking a pounding from all sides the Nikkei 225 backtracked by 297.50 points to 10,207.07. Of the blue-chips, just 11 nosed their way into positive territory.

In Hong Kong, the profit-takers were given their head to lock in gains across the market, even pulling banking giant HSBC into the red. The global lender has been the subject of a string of recent brokers' upgrades but it dipped HK$1 to HK$116.50.

Also on the losers' board was Cathay Pacific Airways, down 20 cents to HK$14.75. Top conglomerate Hutchison Whampoa softened 50 cents to HK$58.75 and exporter Li & Fung shed 25 cents to HK$13.05. The Hang Seng index fell back 144.78 points, or 1.2%, to 12,011.9.

Thailand's Shin Corp, controlled by the family of Prime Minister Thaksin Shinawatra, sealed its much-rumoured deal to buy into AirAsia, one of the region's most promising discount carriers.

Shin Corp, a telecoms company, was level at 27.75 baht, outperforming the wider market.

The SET index back-pedalled on profit-taking, slipping down by 9.63 points, or 1.5%, to 654.73. Leading lender Bangkok Bank dipped one baht to 83 baht.