Asian stocks end with modest drop

The Nikkei sank to a new 17-year low, and is languishing under the 11,000 mark, as investors fret about banks and techs

By staff and wire reports

HONG KONG, China -- Asian markets saw moderate losses on Thursday as Japan's Nikkei slumped to yet another fresh 17-year low.

Australia and New Zealand both lost ground, with Sydney off more than three-quarters of a percentage point.

The poorer prospects for U.S. growth have hit all Asia Pacific markets.

South Korean and Taiwanese stocks closed narrowly in the red. Singapore was also showing losses, mainly tech-driven.

But Hong Kong bucked the trend with a strong showing. Stocks were narrowly up in India in afternoon trade.

Banks down in Tokyo trade

In Japan, stocks fell for a third straight day. The benchmark Nikkei index dropped 0.38 percent to 10,938.45, the lowest close since October 19, 1984.

The day before it closed under 11,000 for the first time in 17 years. It has been hurt by a strong tech weighting, and persistent worries about earnings in that sector.

The broader Topix index has not suffered as much, but still fell 1.09 percent to 1,114.58. But it has still been hit by the continued slide in large-cap bank shares.

Japanese officials have said it will take longer than expected to address problem loans in Japan, an issue many see as the greatest challenge facing Japan's economy.

Mizuho Holdings Inc, the world's biggest bank by assets, led the slide, down 4.0 percent to 480,000 yen.

Stock sales loom

A day earlier, financial services minister Hakuo Yanagisawa said there would likely be no progress in reducing bad loans through fiscal 2003. Japan's banks are wracking up bad loans as fast as they can write them off.

The stock slump is a chicken-and-egg situation. Japan's banks have huge stock holdings, and their persistent declines only undermine their stability further.

Banks will have to "mark-to-market" in September, reflecting the true value of their holdings and taking 60 percent of unrealized stock losses against their earnings.

That could lead to them selling stock holdings. Japan's 15 top banks held a total of 1.89 trillion yen in net latent losses from their stock holdings, according to the Daiwa Institute of Research.

There were more job cuts in Japan's technology sector, another persistent trend.

Again the market rewarded the trims, this time from circuit maker Kyocera Corp.

Its stock jumped 5.3 percent to 8,350 yen. The company tells CNN it will cut 10,000 jobs at its overseas subsidiaries, or 20 percent of its work force by the end of this year. It halved its profit forecast a week ago.

It joins a long list of chip-related restructurings. Toshiba Corp, which said Monday it would cut 10 percent of its workforce, rose for a fourth day to end 3.25 percent higher at 635 yen.

Other techs didn't fare as well. Oki Electric Industry Co. lost 3.65 percent after the telecommunications equipment maker warned on profits.

Sydney down as big stocks slide

In Sydney, the benchmark S&P ASX/200 index shed 0.8 percent to 3,323.9.

The drop was partly in reaction to overnight losses on Wall Street, where the Dow Jones industrial average fell 1.3 percent and Nasdaq lost 1.2 percent.

Sydney's largest listing, Rupert Murdoch's News Corp., dropped 1.4 percent to A$15.72. The media giant looks to the United States for most of its sales.

Australia's largest bank, National Australia Bank, shed 1.2 percent to A$33.98.

Commonwealth Bank of Australia slid 58 1.9 percent to A$30.04.

Australia's leading airline, Qantas, fell 5.4 percent to A$2.83. The company is stopping paying dividends.

It also said it is launching a low-budget airline in 2002 to fly from Australia to destinations in Asia.

Australia's largest telecom, Telstra, fell 2.2 percent to A$4.88. Though it announced record profits this week, investors are worried about growth prospects.

It warned on earnings in June and is taking a writedown of about A$1 billion on its investment in the Regional Wireless Co., a joint venture with Hong Kong-based Pacific Century CyberWorks.

PCCW, Hong Kong's dominant fixed line operator, fell 4.02 percent to a fresh post-merger low of HK$1.67.

Hong Kong up on China's mobile market

But Hong Kong was the only major market in Asia to post a solid gain. The benchmark Hang Seng index rose 0.65 percent to 11,315.63, reversing earlier losses.

It typically marches to the tune of U.S. markets. But investors returned to its China cellular plays.

China Unicom, China's second-largest cell phone company, rose 3.11 percent to HK$9.95. China Mobile ended 0.8 percent higher at HK$25.

Both companies have been battered after China's Mobile's recent earnings showed that, while growth is strong, it is not adding such high-spending, profitable customers.

Cathay Pacific, Hong Kong's largest airline, dropped 2.89 percent to HK$8.40 on fears that the slowing economy would reduce demand for air travel.

In Seoul, the benchmark Kospi lost 0.2 percent to end at 564.36.

Hynix Semiconductor, the world memory chip No. 3, set a new all-time low. It fell 5.9 percent to 880 won.

That was a recovery, but investors could only buy the stock for most of the day. It initially tumbled the daily limit of 15 percent at the open.

Creditors meet Friday to address its financial situation. Hopes of a bailout are fading, but the government is thought to be keen to avoid a collapse.

Korea Exchange Bank rose 2.3 percent to 2,455 won. Hynix's largest lender would benefit if other investors step in to help Hynix.

In Taiwan, the benchmark Taiex lost 0.1 percent to 4.503.86.

Electronics slumped further. But again, the government is trying to bolster the market and the economy, with a land-tax cut.

It will halve its incremental land tax for the next two years.

Taiwan's financials fared decently, with Chang Hwa Bank up 2.1 percent to T$14.60.

New Zealand's NZSE-40 capital index fell 0.2 percent to 2,078.62.

In Singapore, the Straits Times index closed off 1.2 percent at 1,615.74. Technology shares were following the U.S. dip.

But the Bombay Stock Exchange's 30-share index was up 0.04 percent in the afternoon.

Reuters contributed to this report.