Japanese high-tech issues take a dive

Japanese stocks continued to lose ground Tuesday, following a 203-point fall in the Nikkei index on Monday

TOKYO, Japan -- Japanese high-tech issues took a beating in early trade on Tuesday.

There are growing concerns about possible profit warnings, fuelled by weak Japanese economic data and a dip in the tech-laden U.S. Nasdaq market.

The benchmark Nikkei was down 170.48 points or 1.29 percent to 13,056 by mid-morning. The broader TOPIX index lost 22.47 points or 1.7 percent to 1,287.28.

Elsewhere in the region, the Australian market opened weaker, with the S&P/ASX200 losing 30 points to 3404.4. In Seoul, the Kospi was relatively flat, up 1.8 points to 610.03.

Japan's gross domestic product data on Monday came in worse than expected, raising fears the world's second-largest economy could be slipping into its fourth recession in a decade.

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"After the weak GDP data, investors are more concerned that Japan's core high-tech companies will have to cut their earnings forecasts sooner rather than later," said Zenshiro Mizuno, Marusan Securities' senior managing director.

Matsushita, Toshiba lose ground

Electronics giant Matsushita Electric Industrial Co Ltd lost 2.11 percent to 2,090 yen. Japan's top chip maker Toshiba Corp dropped 1.66 percent to 652 yen, partly due to talk that a foreign brokerage house had downgraded its investment rating on the company

But a fall in the yen could limit further losses in technology shares, analysts said. A weak yen boosts overseas revenues of exporters such as automakers and high-tech manufacturers when converted into the Japanese currency.

"The gloom in the U.S. market will likely keep putting a weight on high-techs here," said Hiroichi Nishi, general manager of Nikko Securities' products group.

"But given the dollar's rise to 122 yen in sight, market players cannot sell these shares so aggressively."

Investors have recently been lured into lower-priced issues, especially those whose earnings forecasts are less pessimistic than high-techs, including energy-related shares and those of companies dependant on domestic demand.

Asahi Breweries Ltd rose 1.81 percent to 1,348 yen after the Nihon Keizai Shimbun business daily reported the beer company is expected to post a record parent operating profit of 80 billion yen ($656.4 million) in the year to December 2001, up 13 percent from a year earlier.

Reuters contributed to this report.