Nikkei weakens as big banks tumble


Tumbling bank stocks in Tokyo pushed the Nikkei down by midday Tuesday

TOKYO, Japan -- Tumbling bank stocks in Tokyo sent the market lower by midday Tuesday after an early bounce, following on from Monday's sharp 3 percent fall. Other markets in Asia were also weaker.

The benchmark Nikkei 225 average was down 44.05 points or 0.43 percent to 10,326.52 by midday, after rising as high as 10,478 in the morning session.

The broader capital-weighted TOPIX index was down sharply, off 14.05 points or 1.36 percent to 1015.36.

Heightened optimism in parts of the technology sector was not enough to offset the gloom among Japanese banks, weighed down by worries about their possible exposure to the collapse of U.S. energy trader Enron Corp.

Japanese banks off sharply

Mitsubishi Tokyo Financial Group lost 3.34 percent to 810,000 yen after Monday's announcement that its Bank of Tokyo-Mitsubishi had loan exposure to Enron and its related businesses of $247 million (30.6 billion yen).

Sumitomo Mitsui Banking Corp, Japan's second-largest bank, gave up 8.1 percent to 585 yen. It said its exposure to Enron totaled $210 million.

Mizuho Holdings, the world's biggest bank by assets, was off more than 6.1 percent to 273,000 yen, while rival UFJ lost 7.9 percent to 338,000 yen

Fujitsu, NEC and Canon rose in early trade before weakening, while in contrast consumer electronics giant Sony recovered from a soft start to be up 30 yen to 5740 yen.

One notable winner was consumer electronics manufacturer Sanyo Electric, which rose 3.75 percent to 637 yen after it said it would form a joint venture with Eastman Kodak to make power-saving organic electroluminescent displays.

Camera and copier maker Canon, which relies heavily on the U.S. for sales, initially rose but ended 30 yen or 0.7 percent to 4030 yen.

Telcos were softer, with NTT off 4.7 percent and NTT DoCoMo down almost 2 percent to 1.55 million yen. KDDI was flat by midday after being 1 percent higher at 302,000 yen earlier.

Automakers were slightly weaker. Market leader Toyota Motor made early gains to 3140 yen, then eased to be 3 percent lower to 3030 yen.

Other markets mixed

Elsewhere in the region, markets were mixed, with Australia, New Zealand and Korea in the red but Taiwan in the black, its Taiex up 61.03 points or 1.3 percent to 4707.

Hong Kong's Hang Seng was also heading higher, but Singapore was lower near the end of the morning session.

Australia's S&P/ASX200 was off marginally, down 2.8 points to 3326.0. Market heavyweight News Corp lost12 cents or 0.85 percent to A$14.40, but resources leader BHP Billiton added 18 cents or 1.7 percent to A$10.34. With the exception of NAB, most banks were higher.

The Australia market is expecting an interest rate cut Wednesday morning by the central Reserve Bank of Australia.

New Zealand's Top 40 was off 18.04 points or 0.88 percent to 2023.12.

In Seoul, the Kospi was down 1.24 points to 649.42.

Korea's Hynix continues to soar

Chipmaker Hynix Semiconductor continued to soar after announcing Monday it was talking to rival Micron Technology about a possible strategic alliance. It added 265 won or 10.7 percent to 2730 won Tuesday morning, adding to its sharp gains Monday.

In Tokyo, the poor performance of banking stocks followed Wall Street's downturn Monday on worries about the Mideast conflict and the Enron collapse.

The Dow Jones industrial average finished Monday at 9763.96 for a loss of 87.6 points or 0.9 percent. The Nasdaq composite lost 25.68 points or 1.33 percent to 1904.90.

Another factor weighing on the market is the expectation of weak economic data later this week. The government will release preliminary gross domestic product figures for the September quarter on Friday, with the figure expected to confirm Japan has entered its fourth recession in a decade.

Dentsu, the world's fourth-largest ad agency which made its debut Friday at 420,000 yen, was up 2.5 percent by noon Tuesday at 533,000 yen.

Reuters contributed to this report.