Tokyo slides as confidence ebbs

THE recent retreat in

While other Asian markets were mixed on mainly domestic issues, selling of Japanese stocks by local and international investors slashed more than 3% from the value of the Nikkei in early trade. After an initial fall of more than 3% to 10,577.89, the index gained some respite as selling ease, but it was still down 256.52 points at 10,664.11 by the close.

Today's slump followed last week's non-stop decline which sliced 4.5% off the value of Japan's stocks as weak consumer consumption figures from the US raised doubts about the strength of an export-led recovery.

Further disappointment over weak-kneed reforms unveiled by the government added to the fears that the first-quarter rise in gross domestic product by an annualised 5.7% may be short lived as investment continues to decline and consumers refuse to spend. Late on Friday, investment bankers Morgan Stanley warned that the Japanese recovery would look more like fantasy than fact if Prime Minister Junichiro Koizumi did not take firmer action.

Banking stocks bore the brunt of today's selling. Recent gains following upbeat forecasts that accompanied grim bad-debt figures for the year to end-March, evaporated as investors reckoned that, not for the first time, the bankers' optimism would prove misplaced.

Sumitomo Mitsui, Japan's second-largest banking group, was the biggest casualty as its shares fell almost 6%, but industry leader Mizuho Holdings was close behind as its stock declined 4%. Telecom shares were another drag on the market after J-Phone, the mobile operator controlled by Vodafone, admitted that it was heavily subsiding the price of its handsets to fend off growing competition in a crowded market. The admission sent shares of the parent Japan Telecom sliding 7% while industry leader NTT DoCoMo fell more than 3%.

In Hong Kong, warnings that political unrest in Brazil could add to the problems in Argentina saw shares of HSBC Holdings tumble HK$1 to HK$489.50, after touching a two-month low of HK$88.75. The stock's fall dragged the Hang Seng index down 113.61 to 1,0841.91.

Growing labour unrest at South Korea's Hyundai motor manufacturer unsettled the market, leaving the Kospi index down 9.05 points at 812.96, but revived demand for Taiwan's chip-makers offset concerns over export earnings, and the Weighted Average was down just 4.05 points at 5558.07. Strong bank shares in Singapore produced a gain of 4.6 points to 1612.37 in the Straits Times index.

A mild rebound in News Corporation shares was not enough to counter weakness in resource stocks in Sydney, and the All Ordinaries index dipped 4.8 points to 3251.2. Strong domestic growth failed to inspire Thai investors, and the SET index drifted off 0.22 to 422.22. Malaysian stocks were depressed by an overhang of new issues, and the Kuala Lumpur Composite index dipped 2.17 points to 746.34. In Indonesia, the Jakarta Composite index fell 3.07 points to 541.93.

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.