Tokyo tech stocks lead markets down

Sony, which reports profits later this month, fell to a two-year low Friday

TOKYO, Japan -- Tokyo stocks fell sharply by midday Friday as high-technology companies faced renewed pressure from profit warnings in the U.S. and Europe.

The benchmark Nikkei 225 average ended the morning down 1.99 percent at 12,355.96, dipping below 12,500 for the first time since March 21. The capital-weighted TOPIX index fell 1.48 percent to 1,255.77.

The Nikkei is now down 15 percent from its year-to-date high marked on May 7.

Hong Kong's stock market was closed because of heavy rain and wind associated with typhoon Utor. Other markets in the region were generally weaker.

Australia down on Telstra weakness

In Australia, the benchmark S&P/ASX200 was down 15.6 points to 33562.2, a decline of about half a percent, with telco heavyweight Telstra continuing to fall. It touched a three-year of A$5.00 mid-morning before recovering to A$5.10.

In Seoul, the Kospi lost 12.82 points to 580.79 as SK Telecom and Samsung Electronics declined.

Taiwan's Taiex was down about 15 points in early trade, but recovered by midday to be 38.15 points ahead at 4747.35. With the exception of chip giants TSMC and UMC, tech stocks moved higher.

In Japan, telecom equipment makers weakened after Britain's telecom gear maker Marconi said profit would be halved this year due to the global telecommunication industry slowdown.

Hitachi suspends phone chip production

Hitachi has suspended mobile phone chip production as global demand for IT products slows

Japanese chip shares lost ground after Hitachi said it has suspended output at a new mobile phone chip plant due to slow demand.

Hitachi fell 4.15 percent to 1,132 yen, while Fujitsu Ltd, a leading maker of flash memory chips used in mobile phones and other consumer electronics, fell 2.51 percent to 1,202 yen after it said its production of the chips in June fell more than 20 percent from levels at the end of March.

Fujitsu shares fell as low as 1,197 yen, the lowest intraday level since October 1998. Tokyo Electron, the top maker of semiconductor-manufacturing equipment, fell 4.02 percent to 6,920 yen, while Advantest Corp, a major maker of semiconductor testing devices, lost 5.87 percent to 9,460 yen.

Consumer electronics giant Sony Corp fell 4.08 percent to 7,280 yen, the lowest level since September 1999, extending a four-day, 7.4 percent losing spell.

Telecom shares such as Furukawa Electric Co Ltd <5801.T> and Matsushita Communication Industrial Co Ltd (MCI) <6781.T> followed chip shares lower.

"It seems we just can't see the bottom of U.S. tech earnings yet. On the domestic front, we have our own problems like this one on Hitachi," said Kunihiro Hatae, general manager of the equities trading division at Tokai Tokyo Securities.

Investors are awaiting quarterly earnings announcements from Japanese tech firms such as Sony toward the end of July.

Reuters contributed to this report.