Reforms block deflates Nikkei

TOKYO stocks fell on reports that Prime Minister Junichiro Koizumi has ruled out any further moves to pump up the shrinking economy. Koizumi told reporters during a visit to the

Further indications that the government may seek to avoid further measures came from the Bank of Japan, which raised its assessment of the economy for the first time in 20 months and pointed to recently improving exports. The prospects of a lack of action dismayed foreign investors, analysts and those who had supported the reform-minded leader, and the Nikkei drooped for the second trading day, off 181.70 at 11,345.08.

Japan's bank stocks were under heavy pressure as fears grew that the government has slipped back into complacency following the recent surge in share prices. The 25% gain in the Nikkei 225 Average since early February will have eased the losses on banks' investment portfolios, but investors are worried that any attempts to tackle their huge bad loan books will now be shelved. The two top lenders, Mizuho Holdings and UJF, tumbled almost 5%.

Elsewhere, the market was partly supported by the strength of Toshiba and Fujitsu following reports that they intend to merge their semiconductor operations, creating a new global chip giant.

The prospect of the deal was welcomed by analysts, and Merrill Lynch slapped a 'buy' label on Toshiba stock, which jumped 6%, while Fujitsu added 2%.

Markets in South Korea, which has become a favourite target for foreign funds as it practises its accelerating economic reform policies, forged ahead, and the Kospi gained 2.4% to break through 900 for the first time in 12 months.

After recent weakness on profit-taking the country's stocks came to life again as bargain-hunters chased technology and pharmaceutical counters. The Kospi jumped 21.16 to 906.80, making a total gain this year of 29% in US dollar terms. South Korea has benefited from the shake-up of its once-dominant, but ponderous, conglomerates.

Hong Kong stocks levelled out of their recent steep dive, which had left the market down 5% this year, and the Hang Seng crawled up 33.3 to 10,863.1. Most of the improvement came from a sharp 3% jump in shares of garment trader Li & Fung, which has been pinpointed by local investors as a big winner from any upturn in the US economy.

Conglomerate Hutchison Whampoa added more than 1% despite reporting a 65% fall in net profits on Thursday, as the company made bullish noises about its third-generation telephones in Europe. Semiconductor stocks firmed in Taiwan after upbeat remarks about an increase in technology spending by the US Oracle systems group, and the Weighted Average rose 85.07 points to

Singapore's technology stocks were similarly heartened, and took the Straits Times index up 6.3 to 1800.2. A weakening of metal prices saw profit-taking on resources stocks, but the All Ordinaries in Sydney rose by 49.9 to 3433.8.

Thailand's SET index rose 0.95 to 387.28 and the Jakarta Composite index put on 1.96 to 482.61 but the Kuala Lumpur Composite index slipped 3.31 to 752.91.

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.