Tokyo stays weak; HK, Taiwan up

Tech stocks were mostly weaker Wednesday on U.S. profit declines

TOKYO, Japan -- Tokyo stocks fell by midday Wednesday, led down by sharp profit declines among U.S. and Japanese technology firms, including TDK Corp.

Traders said results from Cisco and TDK dented already shaky investor confidence in the sector.

The benchmark Nikkei 225 average ended the morning down 52.77 points, or 0.43 percent, at 12,266.69, while the broader TOPIX index fell 2.44 points, or 0.20 percent, to 1,221.94.

Elsewhere in the region, markets in Australia, Korea and New Zealand were slightly weaker at midday.

Some pockets of good news

But there were pockets of good news. Taiwan's Taiex picked up some ground and was up 78.07 points or 1.76 percent to 4482.07.

Hong Kong's Hang Seng index was up about 60 points of 0.4 percent to 12,607 by late morning.

In Tokyo, electronic parts maker TDK Corp said on Tuesday its group operating profit for the April-June quarter fell 86.5 percent from a year earlier to about $21 million (2.59 billion yen) because of a high-tech slump, and prospects were poor.

TDK cut its group net profit forecast by 26 percent to 21 billion yen for the full year, but said it would even face difficulties in meeting the revised target.

DoCoMo lifts subscriber numbers

NTT DoCoMo shares made ground after it reported a lift in subscriber numbers

One of the few bright spots in the information technology sector was NTT DoCoMo Inc which gained 2.76 percent to 1.86 million yen because of a brisk increase in the number of its subscribers.

Japan's dominant mobile phone carrier said on Tuesday its mobile phone users had increased a net 463,000 in July, compared with 369,000 in June and 334,000 in May.

Shares in TDK fell 2.66 percent to 6,230 yen, while rival components maker Murata Manufacturing Co Ltd lost 3.66 percent to 8,170 yen.

U.S. tech bellwether Cisco Systems Inc which posted an 86 percent drop in profits, did no favours for high-tech sentiment either.

"TDK and Cisco didn't exactly deliver a blow to the market through negative surprises. But they didn't give any clues as to when the high-tech recovery will happen," said Masatoshi Sato, senior strategist at Mizuho Investors Securities.

An additional blow came from Credit Suisse First Boston, which cut its investment ratings on a range of semiconductor issues in the United States, creating a ripple effect that hit their Japanese counterparts.

Speciality chip maker Rohm Co Ltd fell 3.54 percent to 17,700 yen and Toshiba Corp, Japan's top chipmaker, slid 1.86 percent to 633 yen.

Real estate shares could benefit

Shares likely to benefit from an expected emphasis on urban development in next year's budget extended recent bull runs.

Odakyu Real Estate Co Ltd put on 6.08 percent to 279 yen, boosting its total gains in the past two weeks to 22 percent. Nishimatsu Construction Co Ltd rose 2.75 percent to 598 yen, up 23 percent over the same period.

Investors said construction and real estate firms could remain attractive for the foreseeable future, but buyers would be choosy.

"People will be a lot more selective and pick up only those shares that are highly likely to get a boost from government policy," said Toshihiro Koizumi, fund manager at Chuo Mitsui Asset Management.

Reuters contributed to this report.