Tokyo stocks flat on U.S. worries

TOKYO, Japan -- Tokyo stocks were flat by midday Thursday after the benchmark Nikkei 225 index moved in and out of the red.

Tech weakness in the U.S. and a slide in IBM's share price was offset in Japan by bargain hunting after Tokyo's four days of decline.

The Nikkei closed the morning up 0.89 of a point at 11,893.47 after reaching a mid-morning high of 11,958.18.

The broader capital-weighted TOPIX index was down 8.98 points or 0.75 percent at 1,190.69.

Elsewhere in the region, markets in Australia, New Zealand and Korea were all slightly higher after initial weakness.

Hong Kong's Hang Seng index was down 122 points at 12,304.67 just before midday.

Taiwan's Taiex, which also opened lower, moved in and out negative territory before closing the morning at 4133.14, a drop of 85.97 points or 2 percent.

Traders act ahead of Japanese holiday

Japanese market action took into account the comments Wednesday by U.S. Federal Reserve chairman Alan Greenspan, who hinted at possible rate cuts ahead.

Investors also unloaded part of their short positions ahead of the extended weekend, helping support the market, traders said.

Tokyo's financial markets will be closed Friday for a national holiday.

"After going through volatility in recent trade, not many investors would like to hold their positions through the three-day weekend. And when they square positions, most of them are short following Tokyo's recent downtrend," said Masayoshi Okamoto, a trader at Jujiya Securities.

Sony bounces back from low point

On Wednesday, the Nikkei fell 1.95 percent to 11,892.58, a stone's throw from a 16-year closing low of 11.819.70, marked in March.

Sony Corp rose 1.6 percent to 7,110 yen, bouncing back from its lowest level since August 1999 on Wednesday.

Gains in the consumer electronics giant helped boost sentiment in the technology sector, outweighing pressure from after-hours losses in IBM.

IBM shares traded at $101.50 on the Instinet electronic brokerage system, down from Wednesday's close of $104.28. The fall came despite a higher second-quarter profit posted by the world's largest computer maker.

Among Japanese high-tech stocks, Kyocera rose 2.9 percent to 9820 yen, but other issues such as Fujitsu, NEC and Toshiba all declined.

Tokyo Electron Ltd , a top semiconductor-manufacturing equipment maker, edged 0.15 percent higher to 6,890 yen and speciality chipmaker Rohm Co Ltd gained 1.42 percent to 17,890 yen.

Banks were under pressure again, ahead of the G8 meeting in Genoa, Italy, where Japanese Prime Minister Junichiro Koizumi will discuss his plans for bank reforms.

Mizuho Holdings, the world's largest bank by assets, was down 5 percent to 461,000 yen. UFJ Holdings was down 3.2 percent to 578,000 yen.

Reuters contributed to this report.