Kodak challenge a shock for Canon

CANON has been on a roll in

But the Japanese manufacturing icon, one of the world's leading makers of office equipment, took a tumble today after a new competitor started talking tough.

Eastman Kodak, the US company best-known for its commanding presence in the film market, is changing course and now wants to target the commercial printer market. Unsettled by the aggressive rhetoric, Canon shares today eased 240 yen, or 2.4%, to 5640.

Kodak said it had set up a new unit within the company to spearhead the drive, headed by James Langley, a 30-year veteran from Hewlett-Packard. 'It puts us in the game,' Kodak chief executive Daniel Carp said. 'We are more convinced then ever of the opportunity in this area.'

The switch makes sense for Kodak. Film sales are sliding with the inroads made by new digital systems. Profits are down by more than half at the company and it has already announced a headcount cull that will involve the loss of almost one job in 10.

Ricoh, which derives some its income from printer sales, also dipped as Carp threw down the gauntlet. The shares fell 60 yen, or 2.6%, to 2230. Brokers said weakness for both companies was exacerbated by jitters about a resurgent yen - which could crimp the value of their overseas sales - and widespread profit-taking in a market that has made rapid recent gains.

The Nikkei 225 Average closed down 81.52 points at 10,281.17. Profit-takers also took a nibble out of the broader-based Topix index, which ended lighter by 5.38 points at 1004.20.

The dips came despite the release of positive local economic data. Carmakers were dented as investors locked in recent gains and took note of the yen's renewed strength. Toyota Motor was down 90 yen, or 2.6%, at 3320 while Nissan was off 13 yen, or 1%, at 1375.

Chips and computers conglomerate Fujitsu eased after credit rating agency Standard & Poor's cut it to below investment grade, arguing that its earnings were dropping. Faced with higher borrowing costs, it fell three yen to 540 yen.

Hong Kong shares climbed to their best in 13 months amid hopes for an upswing in the battered local economy by the end of the year, with extra lift coming from Wall Street ' s overnight gains. The Hang Seng index was ahead by 29.71 points at 10,673.34.

Conglomerate Hutchison Whampoa was in focus after interims. Despite continued concerns about its third-generation telecoms venture, positive showings from core units helped it to rise HK$1, or 1.8%, to HK$56. Affiliate property developer Cheung Kong firmed HK$1.25, or 2.2%, to HK$57.75.

South Korean investors largely turned a blind eye to confirmation from the central bank that the country dipped into recession in the first half. Instead, inspired by overnight gains in US tech shares, they put 2500 won on microchip giant Samsung Electronics to 440,000 won.

Hyundai Motor was higher on expectations that a stronger American economy would spur sales. The shares advanced by 650 won, or 1.7%, to 38,800 won. The Korea Composite index was down by just 0.8 point at 753.78.