Tokyo stocks drop at close but Hong Kong gains

Like many Japanese techs, NEC slumped by the close to erase morning gains

By staff and wire reports

HONG KONG, China -- Japanese stocks shunned a soaring Nasdaq to close Wednesday marginally lower.

While Australian stocks closed essentially flat, Taiwan and Hong Kong investors took their cue from the Nasdaq's 3.6-percent rise overnight to push stocks higher.

Earlier on Wednesday, Tokyo's Nikkei index had risen to 13,313.14, buoyed by news that U.S. telecom equipment maker Lucent Technologies Inc expects third-quarter sales to be modestly higher than its second-quarter results.

Analysts said the news eased nagging worries over earnings of Japanese firms that rely on demand in the United States, the world's largest economy.

But Tokyo stocks erased their gains as investors grew cautious over how quickly optimism had spread about U.S. tech firms' earnings.

The benchmark Nikkei average lost 0.05 percent to close at 13,174.84 on Wednesday. Tech losses offset bank gains.

The broader, capital-weighted Topix index finished almost unchanged, losing 0.03 points to 1,307.52.

Techs drop back into red

Japan's high-tech components maker Kyocera Corp. lost early ground to close down 1.2 percent at 11,060 yen.

No. 1 chipmaker Toshiba Corp. lost 0.5 percent to 664 yen. It is off about 20 percent from a five-month high on May 1.

Chip and computer maker NEC Corp. also rose only to end down, dropping 0.1 percent at 1,878 yen.

Banks again made back some of the losses caused by fears over growing bad loans. The world's biggest bank by assets, Mizuho Holdings Inc., rose 2.2 percent to 613,000 yen.

UFJ Holdings Inc. was up 2.34 percent at 655,000 yen.

KDDI Corp, Japan's second-largest wireless carrier, closed up 5.5 percent at 594,000 yen as investors cheered a tie-up with China's No. 2 mobile company, China Unicom.

Hong Kong techs lead

Meanwhile in Hong Kong the benchmark Hang Seng index rose 0.9 percent to end at 13,576.01. Weak U.S. economic data drove property stocks higher, on hopes for future U.S. interest rate cuts.

Among the biggest gainers were China Mobile, which jumped 2.3 percent to end at HK$39.90, while China Unicom rose 2.0 percent to HK$12.95.

China-oriented stocks, the H-shares and red chips, lost ground. They had benefited as mainland investors moved money into Hong Kong from China's B share market.

China's foreign-currency B share markets broke a three-day losing streak after the last restriction on domestic investors ended June 1.

The Shanghai B share index rose 4.2 percent to 230.067. The Shenzhen B share index gained 4.9 percent to 393.54. The markets have been the top performers in the world this year, driven by huge domestic demand.

Sydney, Taiwan end up

In Sydney, the benchmark S&P/ASX 200 closed up 0.03 percent at 3,423.3. Strong gross domestic product growth scotched hopes for an interest rate cut.

GDP surged 1.1 percent in the March quarter, far surpassing analysts' 0.4 percent forecast.

The market was also shaken by a profit warning from one of its largest companies, Brambles Industries.

Brambles dropped A$2.92 or 5.8 percent to A$47.58 after saying full year profits would be down 6 percent.

Traders expect Australian stocks' record close of 3,436.5 to act as a cap in the near future. It hit that high on May 22.

In Taiwan, the Taiex jumped 3.1 percent to close at 5,220.44. The market is waiting from more stimulus measures from President Chen Sui-bian, who announced a relief package on Tuesday.

He arrived Tuesday from a landmark trip to the United States and Latin America.

Winbond Electronics rose 5.3 percent to T$29.90. Its competitor Mosel Vitelic rose 4.7 percent to T$19.90.

One trader said stocks in Taipei could test their three-month high in the next two weeks.

Stocks were also up in Singapore, with the Straits Times index rising 1.1 percent to 1,692.55 in afternoon trade.

Markets in South Korea were closed for the Memorial Day holiday.

Reuters contributed to this report.