Japanese techs hold onto early gains

Japanese tech stocks such as Sony, NEC and Toshiba are stronger Friday, bolstered by Intel's good news

TOKYO, Japan -- Tokyo stocks moved higher by midday Friday after upbeat sales projections by U.S. chip giant Intel boosted Japanese high-tech shares.

Top chipmaker Toshiba and chip testing device maker Advantest made good gains, as did NEC, Sony and mobile phone giant NTT DoCoMo.

The benchmark Nikkei average ended the morning up 161.32 points or 1.21 percent at 13,438.83, while the capital-weighted TOPIX index rose 9.70 points or 0.74 percent to 1,321.33.

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Elsewhere in the region, Korean techs such as Samsung Electronics and Hynix Semiconductor took the Kospi index higher, while Taiwan and Hong Kong were also stronger.

In Australia, media giant News Corp and leading bank NAB weakened, dragging the benchmark S&P/ASX200 down 8 points to 3428.6.

Intel's news welcomed by Tokyo traders

Intel's news that its second quarter sales will be just below the midpoint of its earlier forecast was welcomed by traders in Tokyo.

"Many people in the market had been bracing for negative news from Intel yesterday. So a mere projection of hitting its target came as a big relief for investors," said Kazunori Jinnai, equities general manager at Daiwa Securities SMBC.

Toshiba rose 3.44 percent to 692 yen and fellow chipmaker NEC Corp gained 1.22 percent to 1,914 yen.

Major manufacturers of chip-making equipment also firmed. Tokyo Electron Ltd rose 5.09 percent to 8,460 yen, and Advantest Corp, a top maker of semiconductor testing devices, put on 3.51 percent to 12,980 yen.

Disco Corp, the world's largest maker of semiconductor grinding and cutting equipment, joined the rally, advancing 5.75 percent to 8,090 yen.

Still wary on chip share outlook

But industry executives and analysts remained wary about the outlook for chip shares, despite signs that demand from several key sectors such as personal computers was stabilising and the overall chip market slump would bottom out by the summer.

"Even if it bottoms out, any recovery will be weak," said UBS Warburg analyst Yoshiharu Izumi. "As far as share prices go, they haven't fallen as far as they could. Valuations are still high."

Tokyo's chip-led advance prompted institutional investors to put money back into the stock market, helping major banks such as UFJ Holdings Inc gain some ground.

"When indices move upward like today, institutional investors need to join in just to keep abreast of the market, and large cap stocks like major banks will automatically be thrown into their shopping carts," said Hiroshi Nishida, general manager at Mitsubishi Trust Asset Management.

UFJ gained 2.13 percent to 672,000 yen and Sumitomo Mitsui Banking Corp, another one of Japan's "Big Four" banking groups, firmed 2.03 percent to 1,005 yen.

In Hong Kong, blue chips China Mobile, China Unicom, HSBC, Cheung Kong and Hutchison Whampoa were all higher. Legend Holdings, China's biggest PC maker, continued the gains it made earlier in the week on the strength of a likely tieup with AOL Time Warner.

Reuters contributed to this report.