Chips are down for Asian markets

China plays in Hong Kong have sold off after Beijing's winning bid and now face a new crackdown on mainland "hot money"

By staff and wire reports

HONG KONG, China -- Asian stocks closed on losses Tuesday. Chip stocks hurt Japan, and poor economic prospects are depressing stocks regionwide.

But Taiwan's troubled stocks rose off yesterday's seven-year low, and New Zealand closed with a gain.

In South Korea, markets were closed for the Constitutional Day holiday.

Tokyo's benchmark Nikkei index fell for a third day, ending with sharp losses of 1.7 percent at 12,128.57.

The broader Topix index, which does not have such a strong technology bent, lost 1.4 percent to 1,223.91.

Chip makers trim production

Chip stocks led the losses, after U.S. chipmakers led Nasdaq to a 2.7 percent drop overnight.

Fujitsu Ltd., the world's No. 3 flash-chip maker, on Tuesday said it would shutter some operations for four weeks this northern summer due to low demand.

NEC Corp. is considering such a move and Toshiba Corp. and Hitachi Ltd. have already said they'll trim production.

Tokyo Electron, Japan's top maker of chip-making equipment, lost 4.2 percent to close at 7,080 yen.

Nikon Corp., which makes equipment that sketches circuits on chips, lost 6.5 percent to 1,085 yen.

Japan's top mobile-phone carrier, and the market's biggest stock, fell for a third day. NTT DoCoMo lost 2.5 percent to 1.95 million yen, its lowest close since mid-March.

DoCoMo is expected to delay the launch of mobile-Internet services in Europe because customers are having trouble using the technology.

Argentina contagion hits Australian market

In Australia, the benchmark S&P/ASX 200 index lost 0.5 percent to close at 3,402.7.

Blue chips were down, and fears about the domino effect from Argentina's financial crisis took a chunk out of bank stocks.

There's speculation Argentina is about to default on $130 billion in government bonds.

Australia's biggest stock, News Corp., slipped 13 cents to A$18.29 despite the stock's rise on Wall Street on Monday.

Banks, which have gained as Australian investors get defensive, finally gave up gains Tuesday to end down 0.4 percent.

Australia's biggest bank, National Australia Bank, dropped 23 cents to A$32.75. Commonwealth Bank of Australia lost nine cents to A$31.47.

Mining stocks, another defensive play, also lost ground. BHP Billiton lost six cents to A$10.57. Its peer Rio Tinto dropped 67 cents to A$34.78.

New Zealand's benchmark NZSE-40 Capital index rose 0.2 percent to 2,034.73.

Telecom New Zealand, its biggest stock, rose 7 cents to NZ$5.14 despite losses in overnight U.S. trading.

Hong Kong down on China plays

Hong Kong's benchmark Hang Seng index lost 1.0 percent, ending at 12,495.25.

Rumors China would crack down again on money moving into Hong Kong from the mainland sent Hong Kong's China plays lower.

The H-share index of Chinese companies that trade in Hong Kong tumbled 5.29 percent. Mainland investors have been smuggling money into Hong Kong, where the H shares are cheaper than stocks trading in China.

The red chip index of Hong Kong-based but China-backed companies shed 4.5 percent to 1,073.20.

Investors have also been continuing to sell on the news that China will host the 2008 Olympics.

In Taiwan, the beleaguered benchmark Taiex index rose 0.1 percent to 4,371.99. On Monday, it hit its lowest close since November 30, 1993, at 4,368.69.

The Taiex is now down 7.8 percent for the year through Tuesday, beaten down by poor economic prospects and a sag in chip exports, Taiwan's mainstay.

Yageo, Taiwan's biggest capacitor maker, rose the daily 7 percent limit to T$24.80 on good fourth-quarter sales.

In Singapore, the benchmark Straits Times index was trading down 1.2 percent at 1,641.24 in mid-afternoon trading.

The country, which officially entered recession with its most recent growth figures, took another blow. The Trade Development Board said exports fell 16.9 percent in June from a year ago.

Reuters contributed to this report.