Tokyo leads Asian markets down

Hong Kong stocks were also weaker Wednesday, with the Hang Seng losing about 100 points by midday

TOKYO, Japan -- Tokyo stocks gave up early morning gains to trade softer by midday on Wednesday. Korea, Taiwan and Hong Kong were also weaker.

Japan's benchmark Nikkei 225 average lost 0.14 percent or 18.17 points to 12,556.09, while the broader capital-weighted TOPIX index shed 0.58 percent or 7.32 points to 1,246.87.

Elsewhere in the region, the Australian market made good ground as bluechips Telstra, News Corp and the big banks recovered some of this week's earlier losses.

The benchmark S&P/ASX200 was up 26.1 points to 3411.5.

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In Seoul, the Kospi slipped below the 600-point level, dropping 12.28 points to 596.63. Tech stocks Samsung Electronics, Hynix Semiconductor and SK Telecom were all weaker.

Hong Kong's Hang Seng index was also in the red, shedding more than 100 points to be at 13,025.53 just before midday. In Taiwan, the Taiex was just 1 point lower at 5038.64.

Persistent weakness in bank stocks

In Japan, investor sentiment was chilled by persistent weakness in the banking sector and concerns the market is drifting back towards 16-year lows.

Mizuho Holdings slipped 2.38 percent to 493,000 yen to drag down both major indices. The world's largest bank by assets hit 490,000 YEN earlier -- its lowest point since listing last September.

"When there's considerable uncertainty in the market, like there is now, banks lead the decline," said Hiroshi Arano, director of the investment trust management department at Dai-Ichi Kangyo Asset Management, which manages about $18 billion of investment trusts.

The Nikkei is drawing close to the 16-year low of 11,819.70 reached at the close on March 13.

Mizuho was extending a 4.72 percent fall on Tuesday, when speculation that retailer Mycal Corp was headed for financial trouble sent Mycal plunging 15.9 percent.

Mizuho is one of Mycal's major creditors. Mycal's shares recovered on Wednesday morning, jumping 11.71 percent to 124 yen, with traders expressing guarded relief after the firm said the talk was groundless.

Tough competition in communications

Nippon Telegraph and Telephone Corp, Japan's dominant fixed-line carrier, fell 3.41 percent to 652,000 yen, after touching an eight-year low of 651,000 yen earlier.

NTT faces cut-throat competition in data services, its future source of income, after Internet investor Softbank Corp and its unit Yahoo Japan said on Tuesday they would launch the world's fastest ADSL Internet access service in Japan at half the rate charged by NTT.

In the battered chip sector, Toshiba Corp slid 1.27 percent to 621 yen. Japan's biggest semiconductor maker said on Wednesday it would suspend operations at two plants between late July and early August due to weakening demand.

PC and chip maker NEC Corp gave up 2.69 percent to 1,700 yen, while industry rival Fujitsu Ltd dipped 2.78 percent to 1,293 yen, a level last seen in November 1998.

Reuters contributed to this report.