Nikkei slumps to 17-year low, under 11,000

Japan's Nikkei index on Wednesday fell below 11,000 for the first time since October 1984

TOKYO, Japan -- Japan's benchmark Nikkei 225 stock index closed below 11,000 Wednesday for the first time in 17 years after banks and tech stocks slumped.

Disappointing comments on Japanese banks' bad loans from Financial Services Minister Hakuo Yanagisawa prompted investors to sell bank stocks such as Mizuho Holdings.

High-tech issues joined the slide, with weakness on Wall Street affecting already-shaky investor sentiment.

U.S. computer maker Gateway said after the U.S. market closed Tuesday that it would cut its global workforce by 25 percent and close operations in Japan, Singapore, Malaysia, Australia and New Zealand.

Australia, Korea and HK also weaker

Elsewhere in the region, markets in Australia, South Korea and Hong Kong were also weaker. Taiwan and New Zealand picked up.

In Tokyo, the Nikkei 225 average closed down 209.64 points or 1.87 percent at 10,979.76, below the 11,000 mark for the first time since October 1984.

"We are possibly facing one of the worst periods, with profit warnings likely to come out some more, and banks and corporations are stepping up unloading of cross-held shares into September," said Yoshihisa Okamoto, senior vice president at Fuji Investment Management.

"Without decisive policy action by the government, the 11,000 will be just a passing point."

Unloading of shares held between banks and traditional manufacturers, known as cross-held shares, is expected to pick up pace in the next few weeks ahead of book closing at the end of September, when a mark-to-market accounting method is set to be introduced.

Mizuho Holdings down almost 7 percent

Mizuho, the world's largest bank by assets, lost 6.89 percent to 500,000 yen, giving back part of its 12.6 percent gain made over the past three sessions, while UFJ Holdings Inc dropped 5.1 percent to 633,000.

Yanagisawa said late on Tuesday that the outstanding balance of bad loans at major banks would likely remain near current levels through fiscal 2003.

Consumer electronics giant and tech sector bellwether Sony Corp fell 1.73 percent to 5,690 yen.

Hitachi Maxell Ltd, which on Wednesday became the latest technology firm to cut its earnings forecast, sank 5.4 percent to 1,523 yen.

But Toshiba put on 1.15 percent to move to 615 yen. On Monday it announced job cuts in Japan of about 17,000 between now and March 2004.

DoCoMo falls on concern about expansion

Hong Kong's Hang Seng index also finished the day lower on Wednesday

The market's biggest stock by market capitalization, NTT DoCoMo, dropped 60,000 yen or almost 4 percent to a record low of 1.46 million yen. Dealers said there was growing concern about the company's overseas expansion strategy.

In Australia, the benchmark S&P/ASX200 closed down 22.9 points or 0.68 percent to 3349.2.

The market's biggest stock, News Corp, was down 2.3 percent to A$15.94 after it fell in the U.S. Telstra, the country's biggest telco, announced an Australian record profit of $2.1 billion (A$4.06 billion) and saw its stock put on 3 cents to A$4.99.

Hynix continues to fall in Korea

In Seoul, the Kospi was down 1.9 percent or 10.88 points to 565.63. Hynix Semiconductor continued to tumble after it defaulted on some of its bonds earlier this week. It ended down 14 percent at a record low of 935 won.

In Hong Kong, the Hang Seng index eased almost 60 points to be down 0.5 percent at 11,242.41 at the close.

Shares to move against the downward trend included property companies Cheung Kong Holdings, Hang Lung Development and Sun Hung Kai Properties.

Reuters contributed to this report.