Export hopes shaken after US dive

A SMALL earthquake shook

The Nikkei 225 Average crashed through 11,000 for the first time since mid-April as investors dumped export-related stocks. It plunged to close off 224.21 at 10,920.63.

Mixed signals about the strength of the US recovery have left Asian investors twitchy about the prospects for demand from the region's single largest market, and nerves have been further rattled by the Dow Jones Industrial Average's fall of 6% this year, back to within sight of levels last seen in November.

With the technology heavy Nasdaq market down a grim 23% this year, earlier hopes that Asia's key technology companies would rekindle the Pacific dream are fading fast. Thursday's 1.5% fall on the Nasdaq was another sell signal for technology and computer-related stocks. In Tokyo Sony, which is heavily dependent on the US for its crucial sales of its PlayStation2 video console, and the NEC computer-to-chip giant led the losers.

More damage was done by a big slide in bank shares on fears that a fading recovery will jack up their bad debts once more, making nonsense of recent bullish profit forecasts.

Japan and foreign investors gave a lukewarm response to the latest reforms unveiled by Prime Minister Junichiro Koizumi. Tax relief on research expenses by Japanese companies was hardly seen as the trigger that would launch Japan out of its deflationary slump. In a display of dismal market symmetry with the Nikkei, Hong Kong's Hang Seng index also fell through 11,000 for the first time since mid-April, dropping 163.8 to 10,955.5.

Biggest index loser was HSBC Holdings, where earnings from its key US interests appear under pressure, and bad debts and sluggish lending cloud its local business. The shares lost HK$1.50 to HK$91.50. Earlier this year, when hopes of the US recovery were highest, they traded at HK$98. Other banks weakened while big export plays were inevitably hammered by earnings fears.

A few brave bargain hunters pulled Taiwan's stocks back from heavy early losses, leaving the Weighted Average up 8.6 at 5570.83. While technology stocks took a beating, local banks were snapped up on expectations of a profits recovery.

South Korean shares marginally extended a recent rally as foreign money began to return to the market. The Kospi index added 1.82 to 824.88, as shipbuilder Samsung Heavy rose on new orders, and an oversold Samsung Electronics rallied.

In Sydney, the All Ordinaries index gained 29.4 up at 3294.1, despite being weighed down by News Corp. Other blue-chips also softened but higher oil prices helped resources stocks. Singapore's chipmakers fell sharply, taking the Straits Times index down 22.64 to 1617.30, while Malaysia's Kuala Lumpur Composite lost 5.75 to 747.64. Thai and Indonesian stocks were firmer, with the SET up 0.33 to 426.78, and the Jakarta Composite 2.02 better at 542.10.

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.