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Japan stocks slide 1.6 pct, squeezed by high-techs

TOKYO: Japanese stocks lost ground on Wednesday, dragged down by a drop in high-tech shares and fears of more volatility in U.S. blue chip stocks.

The Nikkei 225 average fell 298.82 points or 1.56 percent to close at 18,897.75. March Nikkei futures fell 220 points to 18,930.

Leading Japanese Internet investor Softbank Corp, seen by many investors a core technology stock, was among the bigger losers, tumbling 5.21 percent or by its daily limit of 5,000 yen to 90,900.

Other stocks in the NTT stable of blue chip info-tech companies -- Nippon Telegraph and Telephone Corp, NTT Docomo and NTT Data -- also finished down.

"Buying (of technology stocks) has been too intensive and has gone too far since the end of last year," said Hiroshi Arano, director at Dai-Ichi Kangyo Asset Management Co Ltd.

Market watchers said Japanese stocks had entered into a consolidation phase after the benchmark stock average marched above the 19,000-point level to a two-and-a-half year high on Monday.

"The upside could remain limited until early February, when a mega-investment fund will be launched that would boost more buying and improve market sentiment," said Masatoshi Sato, manager at Kankaku Securities Co Ltd.

Nomura Asset Management said it plans to launch an investment trust fund worth a maximum of one trillion yen on February 2 focusing on Japanese stocks.

Trading volume decreased, with a total of 561.4 million shares changing hands on the first section of the Tokyo Stock Exchange. Tuesday's volume was 681.57 million shares.

Losing issues outnumbered gainers 734 to 496, with 114 issues unchanged.

Broader indices were all lower. The TOPIX index of all first-section shares lost 34.56 points or 2.07 percent to end at 1,631.28. The capital-weighted Nikkei 300 fell 5.49 points or 1.73 percent to 312.02.

The second section index was down 90.39 points or 3.54 percent at 2,463.75. The over-the-counter (OTC) index was down 73.25 points or 3.38 percent at 2,096.17.

Traders said falls in the Globex S&P 500 index on Wednesday also fuelled fears that the technology-rich Nasdaq Composite index may react negatively to Tuesday's falls in U.S. blue chips later in the day.

On Tuesday, select buying of high-technology stocks sent the Nasdaq 1.64 percent higher, just shy of a record close. But the Dow Jones industrial average came under pressure from inflation fears as the market returned from Monday's holiday.

In Japan, profit-taking hit major Internet portal Yahoo Japan after it became the first Japanese stock ever traded above 100 million yen earlier in the session.

After rising by its daily limit of two million yen or 2.01 percent to 101.4 million, the shares last traded at 99.1 million yen, or down 0.3 percent, in early afternoon. They spent the rest of the day ask-only at 97.4 million yen, down by the daily limit of two million yen from Tuesday's close.

The rise followed a seven-day rally partly inspired by a planned two-for-one share split unveiled last week.

The move -- the firm's third share split in the past year -- was aimed at feeding investors' much-needed liquidity in Japan's core Internet stocks, which have staged a stunning 30-fold jump from a year ago.

The setback in Yahoo shares helped dim overall sentiment.

"Until investors gain confidence of what will be the next market leaders, it would be hard for us to chase the upside," said Hiroichi Nishi, general manager at Nikko Securities Co Ltd.

Elsewhere in the market, small business lender Nichiei Co Ltd dropped 200 yen or 9.01 percent to 2,020, after media reports on Wednesday said Japan's financial regulators were set to suspend part of its operations for up to one year.

Drug Maker SSP Co Ltd closed at 1,075 yen, its highest price so far in the financial year to March 31, up by its daily limit of 100 yen or 10.3 percent, after major German pharmaceutical firm Boehringer Ingelheim said on Monday it had launched a bid to raise its stake in SSP to 33.4 percent from its current 19.6 percent.

Earlier on Wednesday, the Bank of Japan said that Japan's economy had recently turned towards improvement, mainly led by exports and production. But the central bank's assessment in its monthly report for January was unchanged from December and thus gave no fresh direction to the stock market, traders said. -Reuters