Yen rise ends Tokyo's bull run

A PUMPED-UP yen halted

Japanese politicians, including Prime Minister Junichiro Koizumi, lined up to complain about the strength of the yen on foreign exchange markets after it touched a five-month high of 125.18 to the US dollar in New York overnight. Today it eased slightly to 125.90, but investors shared the politicians' concerns that the yen's recent surge will put the brakes on any exportled recovery.

The Nikkei 225 Average shed 55.38 points to 11,801.16 at the close as traders failed to find any comfort in a warning by Finance Minister Masajuro Shiokawa that the government was prepared to intervene to stop 'unnatural' movements

Shares in Toyota and Honda lost more than 1%. Growing pessimism about the outlook for US electronics manufacturers rebounded on Tokyo's chip and computer makers, and Toshiba, which is big in both sectors, tumbled 2.4%, while chip specialist NEC lost almost 3%. Questions about the strength of any recovery in Japan were raised today by a survey that showed spending by the country's 3,000 major manufacturers would decline by 4.4% this year.

Asia's other markets were hit by disturbing reminders of the impact of the 11 September attacks after US leaders warned that further outrages were possible. Shares of exporters tumbled, led by electronics counters, as the warnings from Vice President Dick Cheney added to concerns that the US consumer was not providing the expected boost to sales of computers and other gadgets.

Fading hopes of a US recovery leading Hong Kong out of last year's recession pulled the Hang Seng index down 221.32 points to 11,753.29. High-profile exporters led the slide as sellers wrote off the prospect that earnings would be rebuilt by the weakening of the local currency in line with the US dollar.

In Taiwan shares plunged 2.5%, wiping out all of this year's gains and leaving the index in the red for the first time since 1 January. The fall in the US index of leading economic indicators rebounded on semiconductor makers, which pulled the Weighed Average index down 131.53 points to 5443.18.

Threats by South Korean power workers to strike against corporate reforms and disrupt the World Cup next month added to the unease about the outlook for the country's technology giants, and the Kospi dropped 28.22 points to 837.56.

Sydney stocks slid for the second day, as Wall Street's weakness hit News Corporation shares and resource stocks, and the All Ordinaries index fell 16.2 points to close at 3328.6.

Local takeover action lifted Singapore's Straits Times index 5.91 points to 1730.48, but Malaysia's Kuala Lumpur Composite dropped 2.84 points to 781.72. Thailand stocks continued to rally, and the SET index put on 4.62 points to 385.64, but Indonesia's Jakarta Composite was down 1.60 at 525.34.