US clouds Japan's foreign backers

FOREIGN investors have continued to pile into Japanese stocks despite doubts over the strength of the country's economic recovery, but it did them little good today as computer-related counters slumped on earnings worries.

Overseas investors have bought 1.8 trillion yen (£10bn) worth of Japanese shares since March, helping to fuel the Nikkei 225's 17% gain since the beginning of the year. Much of the buying was based on hopes that the US economic recovery would drive Japanese exports, helping to pull the country out of its latest recession.

Today the mood turned more sombre after further signs that US electronics companies are still struggling to improve earnings, and the Nikkei lost 82.97 points to 11,770.03 as other Asian technology stocks were hit.

Last week's sober assessment of the outlook for chip-related stocks by Goldman Sachs continued to depress investors, and Nasdaq's overnight 1.7% fall sent further shudders through Asia. Suppliers of chipmaking equipment in Japan tumbled by up to 1.5%, while a downgrading of AT&T's credit rating by Moody's Investors Services and a bearish forecast for global mobile phone sales from UBS Warburg put pressure on cellular giant NTT DoCoMo, which slumped 2%.

The recent slide in bank stocks slowed, helping to limit the fall on the Nikkei, as investors judged the recent dive on fears that rising bad loans will render full-year profit forecasts invalid had gone far enough.

The concerns over the outlook for US chip sales, which overnight wiped 3.3% off the Philadelphia Semiconductor index, pummelled South Korea's technology stocks, and the Kospi fell 2.3% after losing 1.60% yesterday. Today's 19.58-points tumble to 815.61 was led by SK Telecom, the country's largest mobile phones operator, which lost 4.5%. Samsung Electronics, a leading chipmaker, drooped 1.5% as the recent strength of the Korean won generated fears about the country's global competitiveness.

Singapore's market was also dragged down by electronics stocks, which were awash in red ink today, and the Straits Times index slid 0.99 of a point to 1683.43. Heavy switching out of tech stocks and into financials rescued Taiwan's Weighted Average, which gained 112.96 to 5736.19. The opposite was happening in Hong Kong, where signs that the country's consumers are burning plastic at a dangerous rate and pushing credit card defaults to record levels, sent local banks' shares skidding.

The Hang Seng index fell 50.05 to 11380.61. as HSBC Holdings lost 50 cents to HK$94.25, and was closely followed down by its Hang Seng Bank subsidiary, the territory's second largest lender and a big credit card player.

Fading takeover speculation saw Australia gold shares ease despite the bullion price closing at five-year highs, but other resources stocks picked up the pace and powered the All Ordinaries up 5.3 to 3338.50.

Aurion Gold, which has surged on a bid from Placer Dome, slipped more than 3%, but heavyweight miner BHP Billiton added 1%.

The recent bull run continued in Thailand, despite some early profit-taking, and the SET added 1.70 to 407.41. The Kuala Lumpur Composite weakened 3.81 to 759.33, but the Jakarta Composite edged up 1.86 to 522.55.

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.