Tokyo market slips on bank worries


Figures out last Friday confirmed Japan has slipped into recession.

TOKYO, Japan -- Tokyo stocks were down by midday Monday as big banks UFJ and Mizuho Holdings continued to slide on worries over credit risks.

Technology stocks were also weaker as part of a broad-based decline.

The benchmark Nikkei 225 average ended the morning down 183.69 points or 1.70 percent at 10,613.20, while the broader, capital-weighted TOPIX index fell 15.97 points or 1.53 percent to 1,029.72.

Other markets in the region also were weaker, with Korea's Kospi dropping 2.5 percent from last Friday's gains to 687, and Australia's S&P/ASX200 down 20 points or 0.6 percent to 3351.

Hong Kong, Singapore and New Zealand also weakened, but Taiwan's Taiex moved against the trend to add 63 points or 1.18 percent to 5396.82.

Record lows for UFJ, Mizuho


Sony and other technology stocks followed banks in a price slide Monday

Japan's UFJ banking group briefly touched a lifetime low of 297,000 yen before ending the morning down 9.85 percent at 302,000 yen.

Investors shrugged off an announcement that UFJ, smallest of Japan's four megabanks, had agreed to sell all its shares in U.S. subsidiary United California Bank to French investment bank BNP Paribas for $2.4 billion.

"Banks are taking various measures to strengthen their financial health, but these steps don't directly lead to the final resolution of their bad debts," an analyst at a medium-size securities firm told Reuters news agency.

Mizuho Holdings, the world's largest banking group by assets, ended the morning down 4.38 percent at 262,000 yen after touching a record low of 259,000 yen. That is 73 percent below its record high of 964,000 yen last October.

Mid-size builder Aoki Corp last week became the 13th listed company to go under in Japan this year, fanning credit concerns among investors.

"There's a lot of talk that Aoki's case signals the start, not the end, of a slew of corporate failures," said Masayoshi Yano, an investment information manager at Tokai Tokyo Securities.

Hard to focus on bright side

"Under current economic conditions, it is difficult to focus on the bright side of the matter and see the failure as a sign of progress in structural reforms, like Mr. Koizumi said."

In a bid to put a positive spin on the Aoki news, Prime Minister Junichiro Koizumi had said the failure showed that banks were making progress in cleaning up their bad-loan mess.

But Aoki's failure was soon followed by a government announcement late last week that Japan's gross domestic product shrank for a second straight quarter in July-September, confirming the world's second-largest economy is in recession.

Shares in heavily indebted real estate stocks also weakened.

Daikyo Inc closed the morning down 3.9 percent at 74 yen after hitting a lifetime low of 71 yen, while Tokyu Land Corp lost 11.95 percent to 140 yen.

High-tech stocks followed banks lower after investors chose to focus on a slide on Wall Street, rather than a softer yen.

"The weak yen is just about the only supporting factor for Tokyo," Keiji Numata, investment information manager at Toyo Securities, told Reuters.

Chipmakers weaken

Top chipmaker Toshiba was down 2.82 percent to 517 yen, Hitachi was off 4.68 percent to 917 yen and Fujitsu lost 3.35 percent to 1011 yen.

Consumer electronics leader Sony dropped 110 yen or 1.8 percent to 6030 yen. Automakers were also lower.

A rare bright spot was steelmaker NKK Corp, which rose 3.9 percent to 80 yen.

In Australia, Normandy Mining rose 4.7 percent to A$1.77 after Newmont lifted its bid for the gold producer by 15 percent, topping a rival offer from AngloGold.

In Seoul, market heavyweight Samsung Electronics gave up 15,500 won or 5.47 percent to 268,000 won.

Reuters contributed to this report.