Tokyo stocks hang onto early gains

TOKYO, Japan -- Tokyo stocks held onto early gains by midday on Wednesday.

Elsewhere in the region, Korea and Taiwan also made ground, but markets in Australia and Hong Kong were weaker.

Japanese stocks were underpinned by short-covering after a dramatic comeback in U.S. stocks.

That provided relief to a market which had been dented by weak Japanese economic data earlier in the week.

The benchmark Nikkei stock average ended the morning 42.66 points or 0.33 percent firmer at 12,882.76, paring Tuesday's 2.92 percent fall.

Nikkei hits low before recovering

Earlier on Wednesday, the Nikkei hit a low of 12,803.42, about 12 percent below a five-month high of 14,556.11 on May 7.

The broader TOPIX index ended the morning at 1,273.44, up 0.23 points or 0.02 percent from the previous close.

In Australia, the benchmark S&P/ASX200 was 0.25 percent lower just after midday at 3393.6, a drop of 8.2 points. Australia's largest telco, Telstra, which dropped 9.4 percent on Tuesday after a shock profit warning, slumped even further Wednesday.

It dropped to a low of A$5.71, before recovering to $A5.82, a fall of 4.3 percent.

Hong Kong heavyweights lose ground

Hong Kong's Hang Seng index was 34.31 points lower at 13,493.13. Heavyweights such as HSBC, Cheung Kong and Hutchison Whampoa were all weaker.

In Japan, the momentum for core high-tech issues such as NTT DoCoMo Inc was weak, partly due to a bleak profit forecast from Nokia Corp, the world's biggest mobile phone company.

"We saw too many falls yesterday so here comes a rebound," said Ryuichi Endo, managing director of the fund management department at Japan Investment Trust Management.

"But I think the market is still in a correction phase from a recent peak on May 7 although an end of the adjustment seems to be nearing," he said.

Japanese GDP worse than expected

Sony and other tech shares including Toshiba firmed Wednesday

Japan's gross domestic product data earlier this week came in worse than expected with a contraction of 0.2 percent for the January-March quarter, shaking investor confidence especially on growth stocks such as top mobile operator DoCoMo and electronics giant Sony Corp on Tuesday.

"The late bounce in New York is a real relief to the market here," said Tsuyoshi Segawa, equity strategist at Shinko Securities.

After briefly entering positive territory, DoCoMo ended the morning unchanged at 2.06 million yen. DoCoMo plunged 5.94 percent the previous day.

Sony firmed 0.91 percent to 8,880 yen at midday, while Japan's top chip maker Toshiba lost 0.47 percent to 634 yen, adding to Tuesday's 3.92 percent fall.

Nokia forecast only "very modest" market growth for the full year amid weak global conditions, and that underlined a consensus among investors that Japanese high-tech manufacturers which largely depend on U.S. demand will have harsh earnings ahead.

Some major banks, including Japan's number four UFJ Holdings Inc, managed to claw back some territory by midday in a knee-jerk reaction to the banking sector's more than four percent plunge the previous day.

UFJ gained 1.94 percent to 630,000 yen, but Mizuho Holdings Inc, the world's largest banking group by assets, ended the morning unchanged at 533,000 yen, which was 0.75 percent above a record low of 529,000 marked on Tuesday.

Reuters contributed to this report.