Asian markets end down on telecom losses

Telecoms dragged Tokyo down, and a Telstra earnings warning shook Sydney

By staff and wire reports

HONG KONG, China - Asian stocks made it two bad days in row Tuesday. All the major indexes closed down for the day, with telecom stocks the big losers.

Japanese stocks were beaten up by technology and telecom selling. Tokyo's benchmark Nikkei 225 index lost 2.9 percent to close at 12,840.10.

That's its lowest close since April 10. The broader Topix fell 2.8 percent to 1,273.21.

Mounting concern over Japan's struggling economy battered major banks and big-name technology companies.

Japan worries about recession

VIDEO Michelle Han on the Asian markets close Play video (QuickTime, Real or Windows Media)

Monday's numbers for gross domestic product showed a drop of 0.2 percent for the March quarter, raising fears of a recession.

Chip shares tumbled after weak performance in their U.S. peers.

No. 1 Japan chip maker Toshiba Corp. fell 3.9 percent to 637 yen. UBS Warburg cut the company's rating to "reduce" from "hold" and lowered its target price to 500 yen from 680.

Specialty chipmaker Rohm Co. slumped 5.1 percent to 20,500 yen after a 15 percent slump in May sales showed sluggish demand.

Poor sentiment spread to the telecoms. Dominant mobile phone company NTT DoCoMo lost 5.9 percent to 2.06 million yen.

KDDI Corp., the No. 2 telco, lost 8.9 percent to 565,000 yen. Traders noted the sell-off came after recent strong gains.

Third-ranked Japan Telecom Co. fell 4.0 percent to 2.64 million yen, despite news of a deal with China's fixed-line monopoly, China Telecommunications Corp.

Banks were also major losers, hurt by lingering worries over their massive bad loans.

Hong Kong's roaring H shares also off

In Hong Kong, the benchmark Hang Seng closed down 1.1 percent at 13,526.68.

Big caps like HSBC Holdings, the market's largest stock, drew it lower. HSBC ended down 2.3 percent at HK$95.50. SG Securities cut its forecast on the bank on Monday in London.

China Mobile, China's biggest mobile-phone operator, lost 0.7 percent to HK$41.30.

China's H shares, stocks based in China but listed in Hong Kong, also lost ground. The index lost 2.8 percent to 554.89. Some investors say H shares, which have run up recently, are at bubble proportions.

Hong Kong's red chips -- stocks based in Hong Kong that do most of their business in China -- also closed down, giving up 0.4 percent.

The best performing markets in the world this year, China's B shares, were split. The Shanghai B share market rose 1.9 percent but Shenzhen lost 2.0 percent.

Telstra deals Sydney a stock shock

Telecoms were also the problem in Sydney, where a shock earnings warning from Australia's biggest telecom company Telstra rocked the market.

Australia's benchmark S&P/ASX200 index tumbled 1.0 percent to 3,401.8, wiping out much of June's gains.

Telstra stock thudded 9.4 percent lower to A$6.08 on massive turnover. That's its worst close since last October. Telstra accounts for 6 percent of the index.

The company slashed its forecast for fiscal 2001 earnings growth to around 5 percent, half its prior target. That caused a selloff in one of Australia's most-popular stocks for retail investors, as well as in telecoms in general.

It's the latest in a string of punishing earnings warnings in Australia. Manufacturer PacDun, down 5.3 percent to 89 cents, developer Lend Lease, down 3.5 percent to A$11.82, and AGL, down 2.3 percent to A$9.26, have all been hit.

There was a sympathy drop in New Zealand. The benchmark NZSE-40 capital index dropped 0.3 percent to 2,054.78.

Telstra's warning drove Wellington's biggest stock, Telecom New Zealand, down 2.6 percent to NZ$5.58.

South Korea's Kospi index closed down 0.2 percent at 607.15. Techs were again the problem, but a nationwide strike had little market effect.

Muted losses in Taiwan

Korea's biggest stock, Samsung Electronics, lost 1.4 percent to 211,000 won.

Bank stocks were rising, aided by bullishness about efforts to sell bankrupt Daewoo Motors and turn Hynix Semiconductor around.

In Taiwan, the Taiex index closed down 0.1 percent at 5,266.24, weathering most of Nasdaq's 2.0 percent overnight drop.

Varian Semiconductor and DuPont Photomasks warned on earnings and announced job cuts. Banks gained again on optimism about government reforms.

In Singapore, the Straits Times index was down 0.7 percent at 1,673.43 in afternoon trade.

Reuters contributed to this report.