Tokyo languishes as wholesale prices fall

JAPANESE stocks continued to reflect the general deflation in the economy today after latest figures showed that wholesale prices of all goods were still falling.

Slack bank lending also reinforced fears that the only news coming out of the sector in the near future would be bad.

Other major markets were also weak as investors took some judicious profits from the New Year's strong opening rally.

Banks, retailers and recently firm technology stocks led the fall in Tokyo which left the Nikkei 225 Average down 96.84 at 10,441.59 at the close. The speed of the economy's deceleration was shown by December's fall of 1.4% in wholesale prices in December, which over the whole year fell by 0.8% after being unchanged in 2000.

The lack of incentive to invest in the face of falling demand was reflected in a drop of 4.3% in bank loans in December, which completed the fourth consecutive year of monthly diminution of loan demand.

Retail stocks were hammered by falls in Daiei, the country's second largest supermarket chain, which is facing bankruptcy and today had its credit rating further slashed by Standard & Poor's. Daiei shares crashed 17%, while the combination of poor lending figures and bad loan problems sent major bank shares stumbling by more than 5%.

Mild rallies among Hong Kong's recent big losers in telecoms and banking gave the Hang Seng index an early boost after its week-long dive, but the recovery lacked conviction and by midday the index was down 42.81 points at 11,213.26.

The biggest loser was Cathay Pacific, which fell by almost 6% after the company warned that it was suffering a long-term slump in both passenger and cargo traffic.

The rebound undid some of the recent damage done to the mainland cellphone groups China Mobile and China Unicom, which have suffered from the opening of the mobile market to more competition.

There was thin buying of HSBC Holdings on the grounds that recent sell recommendations based on its Argentinian exposure exaggerated the problem. The stock edged back up 0.50 cents to HK$90.50.

Taiwan became the major target for profit-taking as the concern over the country's underlying economy overcame recent bullish talk about the prospects for semiconductors. The Weighted Average dived more than 3% or 183.69 points to 5687.59.

South Korean stocks continued to back-track, led by Hynix Semiconductor which fell 2% on uncertainty over the timing of any deal with Micron of the US. Prospects of prolonged agony over Hynix's debts punished creditor banks by as much as 3%, although the Kospi slipped only 0.87 points to 727.36.

Pre-weekend book keeping ended Singapore's-recent run, despite a property sector-boosted by hopes of better demand for apartments. The Straits Times index dipped 3.31 to 1703.33.

Caution overtook Sydney after a promising start, although the All Ordinaries index held on to a gain of 8.3 points to close at 3360.1. Gold stocks provided excitement as attention centred on Normandy Mining, which remained marginally under the AngloGold offer.

Malaysia's Kuala Lumpur index fell back 2.24 to 702.75, but Indonesian stocks powered ahead, taking the Jakarta Composite up 11.43 points to 413.5. Thailand's SET index edged up 1.53 points to 320.83.

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.