Japan's Nikkei average fell 1 percent to a five-month closing low on Thursday, dragged down by Tokyo Electron Ltd and other tech shares as worries grew about tech spending in the face of increasing economic gloom. Shares of glass makers like Nippon Electric Glass tumbled after rival Corning Inc cut its outlook while shippers lost ground on a drop in a major freight index.
"High-tech shares were sold, following their US peers, and they weighed heavily on the index," said Katsuhiko Kodama, senior strategist at Toyo Securities. "There are many worrying factors in the market, such as the global economic outlook and the credit crunch." OECD forecasts showed on Tuesday Europe's economy is slowing more sharply than predicted, with Britain near recession, and the United States and Japan faring little better.
The benchmark Nikkei ended down 131.93 points at 12,557.66, the lowest close since March 31. The broader Topix fell 1.6 percent to 1,201.65. Japan's economics minister, Kaoru Yosano, who has promoted fiscal reform, said he planned to challenge frontrunner Taro Aso in the race to become the next prime minister, setting the stage for a clash over economic policy.
Some market participants said they feared a potentially divided ruling party would leave the new leader with less clout. "There is no time for this," said Masanobu Takahashi, chief strategist at Ichiyoshi Securities.
But gainers included video game developer Tecmo Ltd which jumped 7.5 percent to 937 yen on a report, later confirmed, that it had started merger talks with fellow game maker Koei Co, knocking back bigger rival Square Enix Co Technology shares were hit after its US peers tumbled on Wednesday, with the Philadelphia Semiconductor Index falling 4.2 percent.
Chip-making equipment supplier Tokyo Electron slid 4.4 percent to 5,650 yen, the biggest drag on the Nikkei, and Advantest Corp, a maker of chip testers, fell 4 percent to 2,175 yen. DRAM chip maker Elpida Memory Inc declined 4.7 percent to 1,949 yen, extending sharp losses made on Wednesday after a brokerage downgrade. Nippon Electric Glass fell 14 percent to 1,225 yen and Asahi Glass Co tumbled 3.4 percent to 1,068 yen after rival Corning Inc cut its outlook on slower-than-expected demand for glass used in flat TVs.
Shippers extended losses after the key freight gauge continued to decline, with Mitsui OSK Line Ltd plunging 7.3 percent to 1,116 yen and Kawasaki Kisen Kaisha Ltd falling 5.9 percent to 652 yen. Trade was active, with 2.1 billion shares changing hands compared to last week's daily average of 1.4 billion. Declining shares outnumbered advancing ones by more than 3 to 1.
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