Asian stocks down on Japan GDP

Japan said its economy shrank 0.8 percent in the second quarter, offering no joy for its markets

By staff and wire reports

HONG KONG, China -- Asian markets slumped to close almost uniformly lower Friday, as Japan revealed a drop in its economy for the second quarter.

Investors also responded to a stumble on Wall Street on Thursday that left stocks there near two-year lows.

Japan, Australia and Hong Kong -- the big three Asia-Pacific markets -- all lost ground. Hong Kong's U.S.-driven stock exchange was particularly hard hit, losing close to 3 percent.

Of the larger markets, only South Korea broke into the black, thanks to restructuring hopes. Taiwan fell again.

Stocks in Singapore were trading down more than 2 percent near the end of trade, with India also down.

Nikkei down 1.25 percent

In Japan, the benchmark Nikkei index fell 1.25 percent or 133.54 points to 10,516.79.

The Cabinet Office said Friday that Japan's economy shrank 0.8 percent in the quarter through June. That was in line with estimates but revealed the hardships facing the world's second-largest economy.

Economists expect at least two more down quarters for GDP. That would put Japan in its fourth recession in 10 years.

The broader Topix index slipped 0.91 percent or 9.91 points to 1,080.83.

It was held back by an unrelenting slide in Japan's largest cell-phone carrier, NTT DoCoMo Inc. It dropped 4.44 percent to a 29-month closing low of 1.29 million yen.

DoCoMo was Japan's largest stock but persistent losses have seen it cede that title to Japan's largest carmaker, Toyota Motor Corp.

Toyota fell back 1.33 percent to 3,700. Carmakers had run up on Thursday, thanks to a weaker yen.

Tech stocks bore the brunt of Friday's selloff. Computer and chipmaker NEC plunged 6.2 percent to a 29-month closing low of 1,255 yen.

NEC, unlike most other big chipmakers, has not yet cut its earnings forecast for this business year. Investors are now pricing in a downward revision.

Asahi Bank Ltd. fell 14.36 percent to 161 yen. It denied reports that it had decided to skip its interim dividend for the half-year to September and that it was about to be nationalized.

The Tokyo stock exchange has suspended its shares, as well as those of embattled Daiwa Bank Ltd., after another report that they are likely to begin negotiations on merging their operations.

Daiwa said it has received an offer from Asahi and that they are discussing possible ties.

The economic downturn has hurt retail stocks. But the GDP figures showed that private consumption is still relatively strong in Japan.

Japan's top casual clothes retailer, Fast Retailing Co., recovered 10.19 percent to 11,900 yen. Steep falls in its stock since it changed focus from growth to larger stores had pushed its price-earnings ratio to half or one-third of its peers.

News Corp. down in Sydney

In Australia, the benchmark S&P/ASX 200 index finished down 30 points or 0.9 percent at 3,234.3, its lowest close since early April.

Australian carrier Qantas Airways held steady at A$2.74, after Air New Zealand's troubled Australian unit Ansett admitted it is losing A$1.3 million a day, before interest and taxes.

Analysts say if that translates to a market-share loss for Ansett, it will be Qantas's gain.

Sydney's largest listing, media giant News Corp., was the main drag. It fell 4.2 percent to A$14.99.

Its efforts to buy U.S. satellite television group DirecTV drag on and on. The stock is now at its lowest since January 2.

News also gets much of its business in the United States, where the Dow Jones industrial average closed 1.9 percent down at 9,840.84 on Thursday.

Nasdaq lost 3.0 percent to end Thursday at 1,705.64.

Banks were also down. Investors are locking in gains, with the sector having held up well of late as a conservative play.

Commonwealth Bank of Australia was the weakest of the Big Four banks, finishing 2.2 percent lower at A$28.61.

Takeover target Normandy Mining edged up two cents to A$1.32 in the wake of South African giant AngloGold's bid for the Australian gold miner.

Hong Kong down 2.6 percent

New Zealand's benchmark NZSE-40 capital index lost 1.1 percent to 1,980.60.

Embattled airline Air New Zealand's B shares, open to overseas investors, were down 11 cents to NZ$0.79.

Singapore Airlines said it would not increase its stake in the carrier at the current price.

Hong Kong's benchmark Hang Seng index lost 2.63 percent, or 280.12 points, to end at 10,384.20.

The sharp drop was driven by U.S. losses and tech selling. China's largest computer maker, Legend Holdings, dropped 6.7 percent to HK$3.15.

China Mobile, the largest cell-phone company in the mainland, lost 1.2 percent to HK$21.30.

But embattled Internet and telecom company Pacific Century CyberWorks bucked the downturn. It jumped 5.85 percent to HK$1.81.

It released earnings that exceeded expectations after the end of trading Thursday. It posted a HK$935 million half-year profit.

South Korea up on Hynix heavy trade

In South Korea, the benchmark Kospi closed up 0.45 percent at 555.08. The market largely ignored a cabinet reshuffle by President Kim Dae-jung.

But investors were again looking at corporate restructuring. Hynix Semiconductor closed up their daily maximum for the second straight day.

Hopes are high after the world memory chip No. 3 sold its flat-screen business for $650 million to a consortium led by Cando Corp. of Taiwan.

Hynix's creditors are also discussing a bailout package from creditors, which might come next week.

Hynix rose the 15 percent max to 1,290 won and was the heaviest-traded stock.

Seoul's biggest listing, world memory chip No. 1 Samsung Electronics, reversed its course to rise .33 percent at 191,000 won.

In Taiwan, the benchmark Taiex closed down 0.8 percent at 4,302.16.

Electronics stocks were hit hard by Nasdaq's drop on Thursday. It was the third dip in a row for Taiwan stocks.

Banking and insurance stocks also lost ground.

In Singapore, the Straits Times index was down 2.1 percent at 1,574.82 shortly before the end of trade.

Singapore Telecommunications was off 6.5 percent at S$1.72. SingTel confirmed it is in talks with Dutch telecom KPN to buy Indonesia cell-phone company PT Telkomsel.