Asian stocks follow U.S. techs down

TOKYO, Japan -- Tokyo stocks edged lower by midday on Monday, as a faltering economy and persistent weakness in U.S. stocks blunted enthusiasm for bargain hunting.

Tech stocks mostly followed their U.S. counterparts down.

The benchmark Nikkei average lost 0.16 percent or 20.80 points to 12,769.58, while the capital-weighted TOPIX index gave up 0.17 percent or 2.20 points to 1,263.12.

VIDEO CNN's Dalton Tanonaka with the Asian stock market update

Elsewhere in the region, markets in Australia, New Zealand, Korea, Hong Kong and Taiwan were all weaker.

In Sydney, the benchmark S&P/ASX200 lost 20.5 points to 3395.2 amid weakness in blue chips such as News Corp, and big banks NAB, CBA, Westpac and ANZ.

In Seoul, the Kospi lost 8 points to 610.61, led down by high tech stocks such as Hynix Semiconductor, Samsung Electronics, LG Electronics and SK Telecom.

Hong Kong telco stocks weaker

Hong Kong's Hang Seng index declined 64 points to 13,038 just before midday on losses by market heavyweights China Mobile and China Unicom and other telecommunications stocks.

In Tokyo, major technology issues were mixed following the U.S. Nasdaq's 0.77 percent fall on Friday, its sixth straight day of losses.

Toshiba Corp, the country's top producer of chips, sank 0.94 percent to 635 yen, while PC and semiconductor firm Fujitsu Ltd gained a modest 0.22 percent to 1,380 yen after closing the previous session at its lowest level since November 1998.

Consumer electronics giant Sony Corp slipped 1.03 percent to 8,690 yen, now 16 percent below a nine-month intraday high of 10,340 yen hit on May 22.

"From a technical perspective, the market looks ripe for a rebound. But there are too many factors of concern to warrant active buying on dips," said Nobuaki Kurisu, chief fund manager at Sumisei Global Investment Trust Management, which manages about $2.4 billion of investment trusts.

Wary over possible profit warnings ahead

Wariness over a possible round of profit warnings from U.S. firms this week, signs Japan's underlying economy was deteriorating, and disappointment at a lack of concrete policy steps from Prime Minister Junichiro Koizumi were the main factors pressuring the market, analysts said.

In the telecommunications sector, Japan Telecom Co Ltd fell 0.82 percent to 2.42 million yen after its mobile unit J-Phone East said it would cut its cellular service charges from July to compete against industry leader NTT DoCoMo.

DoCoMo lost 1.46 percent to 2.03 million yen.

Bounce for banking sector

The banking sector managed a small bounce, with Mitsubishi Financial Group up 1.3 percent to 1.01 million yen. On Friday, the sector subindex had fallen to its lowest point since October 1998, when Japan was in the throes of a financial crisis.

Mizuho Holdings, the world's largest bank by assets, put on 1.01 percent to 500,000 yen. In the previous session, it fell to its lowest close since listing last September amid worries over the sector's massive bad loan dilemma.

Reuters contributed to this report.