US jobless takes toll on Tokyo

JAPANESE stocks reeled today as investors fled the market on fears that the US economic recovery is now on hold. The poor employment figures, which had triggered a fall of almost 2% on Wall Street overnight, had Tokyo's market staggering from the opening bell, as sentiment was further crushed by growing political turmoil.

The Nikkei 225 Average slumped more than 2%, losing 248.71 points to 11,302.30, as shares of exporting stocks and computer related concerns stumbled.

Other regional markets were mixed, but shares in South Korean companies, many of which depend on the US for their ultimate sales, were also hit by an unexpected interest rate rise. In its third straight day of falls, the Kospi lost 8.34 points to 818.53.

It was a sombre return to business after a four day holiday for investors in Tokyo, who were dismayed by Friday's rise in US unemployment numbers, and a drop in service activity which suggest the consumer boom that had appeared to carry the world's largest economy across the gulf of recession was fading.

Biggest falls were seen among computer related stocks, which continued to suffer from the gloomier sales outlook reported by US manufacturers last week. Testing equipment giant Advantest slumped more than 8%, closely followed by production equipment maker Tokyo Electron, down 7%. Among the consumer electronics casualties was Sony Corporation, which lost almost 2%.

Investors were also rattled by fears that the reform plans of Prime Minister Junichiro Koizumi will be derailed by yet another political scandal. Politicians were today calling for the head of Muneo Suzuki, a powerful member of the ruling Liberal Democratic Party, after one of his aides was arrested on corruption charges. The expected time spent debating the issue could mean key legislation required to push forward reforms would not be enacted in the current session of Parliament.

South Korea, which was already weakening on falling chip prices, was further hit by a 25 basis points interest rate increase to 4.25%, as the central bank signalled that it was standing firm on inflation. The bank recently forecast that growth in South Korea this year would be around 5.7% as the domestic economy was boosted by growing exports.

Taiwanese stocks were refreshed by news that big water shipments were headed for drought stricken manufacturing centres on outlying islands, and the Weighted Average recovered.

The recent rally in Hong Kong stocks, which had been previously left behind by other Asian markets this year, faded as Wall Street's performance triggered profit-taking. But the Hang Seng recovered in late trade to end ahead 59.8 at 11,796. Property stocks suffered as investors locked in profits, and question marks remained over the resilience of the residential and commercial property markets.

Sydney stocks were shaken by a downward revision in sales forecasts by retail giant Coles Myers. Its shares fell another 4%, for a two-day slump of 20%. But the All Ordinaries closed 31.5 higher at 3325.

Singapore's Straits Times index gained 8.6 points to 1730.6. Malaysia's Kuala Lumpur Composite index fell 7.13 points to 787.97, Thailand's SET lost 2.11 to 371.94, and the Jakarta Composite weakened 0.54 to 539.27.

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.