Falling yen sparks Asia fears

ASIA'S New Year party was spoiled today by a plunging yen and warnings from Morgan Stanley economists Stephen Roach that the US was heading for double-dip recession.

A bullish forecast from Compaq computer failed to stem profit-taking in leading tech stocks in the region which sent Japan's Nikkei 225 Average down 2.26%.

Pressure on other regional markets was increased as the biggest daily fall in the value of the yen in more than three months took it to its lowest since October 1998. Fears that cheaper Japanese exports would slow sales of other Asian manufacturers spread after government officials indicated that there would be no support for the currency, which dropped to 132.51 to the US dollar from New York's close of 131.09.

Some analysts now see 135 as the near-term target for the yen.

Investors halted their recent buying spree, which was based on expectations of a US recovery, after Morgan Stanley's warning that the signs of a classic double-dip were in place, and that after a positive first quarter the US was likely to go back on the skids.

Technology stocks, which had led the charge on hopes that inventories were emptying and demand would revive, were battered by the prospect of renewed pain.

Computer related stocks in Tokyo tumbled, dragging the Nikkei 225 down 246.76 points to 10,695.6 at the close.

Top chipmakers such as NEC, which had gained more than 10% in days, fell back by more than 3%, while Sony and other consumer goods groups that rely on the US for their main market were also in retreat.

Compaq's unexpectedly cheerful news that a good holiday season had generated profits in the fourth quarter failed to prop up technology stocks elsewhere in the region. South Korea's non-stop ascent that began on Christmas Eve was finally reversed as the Kospi slid more than 2%, down by 15.91 points to 735.57.

Foreign investors were reported to have headed for the exits and recent star performers in the semiconductor industry tumbled. Samsung Electronics lost more than 2% despite revealing that it was considering raising chip prices in mid-month.

Taiwan stocks opened at nine-month highs before investors judged that recent gains had outstripped earnings prospects, and prices reversed to take the Weighted

Average down 24.81 points to 5810.08. Chip giants Taiwan Semiconductor and United Microelectronics led the falls.

Singapore was a rare gainer from Compaq's announcement as local equipment supplier Creative Technology surged more than 8%, leaving the Straits Times index up 16.28 points at 1712.23. Hong Kong's Hang Seng index was sent sharply lower by profit-taking across the board and lost 184.11 points to 11,708.53. Banks stumbled on concerns about the breaking of the Argentine peso's peg to the dollar, while confirmation that China is opening up the mobile market hit the locally quoted cellphone stocks.

A slow overnight performance on Wall Street weakened demand in Sydney, paring a recent strong gains, and the All Ordinaries index dipped 21.1 points to 3364.2.

In Malaysia the Kuala Lumpur Composite slipped 6.09 points to 691.02, while Thailand's SET index drooped 1.72 to 315.97. But Indonesia's Jakarta Composite index added 0.80 to 389.52.

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.