Tokyo, Asian stocks close down

By Staff and wire reports

HONG KONG, China -- Asian stocks closed down Friday. Investors were bracing for an index reshuffling that will cause fund managers to sell off in most Asian markets.

Tokyo's benchmark Nikkei average ended 0.2 percent lower at 13,877.77.

The downdrift was led by falls in some blue chips, including Nissan Motor Co. It closed down 1.2 percent at 835 yen despite posting a record profit of $2.7 billion after the close Thursday.

As expected, the Bank of Japan decided to maintain its ultra-easy credit policy at its two-day policy meeting, which ended Friday.

The capital-weighted Topix index closed just in the red, giving up 0.4 percent to 1,371.57.

Index compiler Morgan Stanley Capital International will announce a rebalancing of its influential global indices on Saturday, based on free-float criteria.

That is expected to hurt most Asian markets next week. Tokyo stocks were also caught in a tug-of-war between contrasting earnings.

Auto shares sell off

Japan Airlines Co. and Yamanouchi Pharmaceutical Co. both warned on profits. JAL lost 4.9 percent to 423 yen, while Yamanouchi dropped 4.9 percent to 3,270.

But there were robust figures from Kawasaki Heavy Industries Ltd., which saw its shares rise 9.6 percent to 194.

Auto sector shares sold off, despite record profits from Nissan and Toyota this week. Mitsubishi Motors Co. also announced a record $2.3 billion loss on Friday.

The MSCI rebalancing will likely hurt all their stocks, as well as other companies held by the government, such as Nippon Telegraph and Telephone Corp.

"The auto sector in general as well as NTT are likely to be affected negatively from MSCI's changes in its indices. That's another concern for investors," said Hiroshi Sato, equities general manager at Cosmo Securities Co Ltd.

Nissan had also run up ahead of its good news, hitting a four-year high of 890 yen on March 22. Nissan hit a four-year high of 890 yen.

Hong Kong, Australia, Taiwan down

Hong Kong's Hang Seng index ended Friday down 1.3 percent at 13,459.18.

It was dragged lower by companies that do most of their business in the United States. Weak sales from the Gap and Dell Computer renewed fears about a U.S. rebound.

Johnson Electric, which makes an array of small engines, lost 4.0 percent to HK$14.35. It gets most of its revenue in the United States.

Trading company Li & Fung dipped 0.7 percent to HK$14.35. It also relies heavily on U.S. sales.

Despite being expected to gain from the MSCI reshuffling, bank stock HSBC Holdings lost 1.8 percent to HK$97.25.

But subway operator MTR Corp. and property developer Cheung Kong Holdings, also likely to gain, ended the day up.

In Australia, the benchmark S&P/ASX 200 index closed down 5.9 points or 0.2 percent at 3,404.1.

But that came as no surprise after a week that saw the benchmark index already clinch two record closing highs.

It finished up 0.4 percent on the week, confirming it is one of the region's strongest markets at the moment.

Despite a likely recession in Australia, its market was not driven to the same heights as other markets during last year's technology stock boom, or the same depths, when it crashed.

The weak Australian dollar has also caused overseas companies to look at buying Australian operations.

The Australian dollar was trading at around 52.7 U.S. cents late Friday, compared with around 56 cents in January.

The Australian government releases its budget on Tuesday.

Media giant News Corp. and Australia's largest telecoms group Telstra are expected to be the main losers from the MSCI reshuffling. But traders said much of that was already built into their share prices.

News Corp. edged up nine cents to A$17.73, while Telstra fell eight cents to A$6.52.

Mining giant BHP closed at a record high, up 35 cents or 1.6 percent at $22.85. Shareholders approved its merger with London-listed Billiton PLC to create one of the world's biggest mining concerns.

In Taiwan, the benchmark Taiex index finished down 0.6 percent at 5,11.67.

Analysts said a television address by President Chen Shui-bian disappointed investors.

Investors had been hoping state-backed funds would buy financial stocks. But banking and insurance stocks were the big losers after Chen's speech, dropping 3.2 percent.

One of the few gainers in Asia was South Korea. The Kospi index closed up 0.7 percent at 600.54.

LG Chemical, the nation's largest chemical manufacturer, closed up 12.1 percent at 17,550 won, bolstered by overseas buying.

Financial stocks were buoyed over optimism about bank reforms. Kookmin Bank rose 3.4 percent to 16,550 won.

Reuters contributed to this report.

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