Tokyo, Hong Kong, London — Tokyo stocks reversed two days of gains to end sharply lower on Friday as renewed firmness in the yen after Wall Street's tumble further dampened sentiment, triggering selling in Sony Corp. and other blue chips.
The benchmark Nikkei average dipped 295.90 points or 2.82 per cent to close at 10,202.36 after falling more than 3 per cent at one point. The capital-weighted TOPIX index was off 2.02 per cent at 989.71.
Key September Nikkei 225 futures stood at 10,230 after falling as low as 10,160 in early afternoon trade on sell orders worth 600 lots. This caused a wave of arbitrage selling in the cash market, traders said.
Sony, the world's biggest consumer electronics maker, which earns two-thirds of its sales outside Japan, slumped 4.66 per cent to 5,530 yen, erasing Thursday's climb, while copier and camera maker Canon Inc. fell 3.52 per cent to 4,110.
Bucking the downtrend, Kawasaki Steel Corp., Japan's third-biggest steel maker and the most actively traded issue by volume on Tokyo bourse's main board, rose 0.6 per cent to 168 yen.
Second-ranked NKK Corp., which is set to merge with Kawasaki later this year, erased earlier gains to close down 0.81 per cent at 123 yen.
The firmness in steel makers reflected expectations that a recent rise in steel product prices and growing demand from Asia will support their bottom line, traders said.
In the United States, the Standard & Poor's 500 Index hit a five-year low on dismal earnings and accounting concerns.
The tech-laden U.S. Nasdaq index lost 3 per cent and Nasdaq futures were off about 1 per cent in after-hours trade following a loss warning from computer server maker Sun Microsystems Inc.
Hong Kong — Hong Kong stocks ended more than 1 per cent lower on Friday, as grim corporate earnings from the United States renewed concerns about the health of the global economy and the performance of equity markets worldwide.
Top blue-chip losers included export plays Johnson Electric and Li & Fung, as investors worried that sluggish overseas demand would hurt their earnings.
The benchmark Hang Seng Index ended 1.22 per cent, or 127.09 points, lower at 10,325.46. It was down 3 per cent on the week and remains one of Asia's laggards, with a loss of 9.4 per cent so far this year.
Recent weakness in the U.S. dollar — to which the Hong Kong currency is pegged — could have made some foreign investors hesitant to enter the market on worries that the value of their Hong Kong investments may fall, some analysts said.
In terms of visible trade, however, an orderly correction in the greenback should make Hong Kong's exports more competitive.
Overall, investors were jittery after weak earnings reports from U.S. firms sent Wall Street sharply lower on Thursday.
This took a toll on the shares of Hong Kong exporters. Micro-motor maker Johnson Electric slipped 3.66 per cent to HK$7.90, while consumer goods sourcing firm Li & Fung fell 4.71 per cent to HK$9.10.
TechTronic Industries, which sells power tools to the U.S. and Europe, shed 2.24 per cent to HK$6.55.
Telecoms and technology issues also took a beating from weakness on the U.S. tech board. China Mobile, the mainland's number-one wireless carrier, skidded 1.54 per cent to HK$22.35. Its lone, smaller rival China Unicom fell 3.33 per cent to HK$5.80.
Elsewhere, knitted fabric maker Texwinca Holdings fell 5.22 per cent to HK$6.35 after the firm posted a 14.3 per cent rise in full-year earnings, slightly below market expectations.
Some investors could have taken the opportunity to lock in profits as the stock had surged 47 per cent in the three months up to Thursday's close, and some 134 per cent in the past year.
Fountain Set, also a knitted fabric maker, is trading at about 9.5 times forecast 2001/02 earnings. The stock eased 0.79 per cent to close at HK$3.125.
Bucking the market was Boto International Holdings, the world's largest artificial Christmas tree maker, as it jumped 4.84 per cent to HK$0.325 despite posting a near 10 per cent drop in full-year net profits.
Investors shrugged off the lower earnings and bought the stock on hopes for a special dividend, analysts said. Boto recommended a special cash dividend on the condition that it could dispose of its core businesses to a firm controlled by U.S. private fund Carlyle Group for HK$1.064-billion.
Elsewhere, shares of fast-food chain Fairwood Holdings slumped 13.08 per cent to HK$0.113 after it posted a wider full-year loss, blaming dwindling consumer spending in Hong Kong.
Market turnover was thin at HK$5.22-billion ($669-million U.S.), lower than an average of HK$6.44-billion over the past 20 trading days. Losers swamped gainers by 372 to 110, with 311 stocks unchanged.
London — Early losses increased for Britain's FT-SE 100 index on Friday morning as investors clicked back into bearish mood after three days of gains, although Abbey National (ANL.L) rose on news its chief executive had quit.
The bank group's shares climbed 2.3 per cent after Ian Harley resigned on Friday, just weeks after a shock profit warning, and dealers said the move removed an obstacle to merger activity.
But Abbey was the only bright spot in a banking sector taking 32 points off the FT-SE 100 (.FTSE), which by 0927 GMT was down 138.7 points to 4,158.6, battered by another Wall Street drop and a clutch of disappointing U.S. company results and economic readouts.
Banks, the main engine behind Thursday's 107-point FT-SE 100 gain sank back with Barclays (BARC.L) down 5 per cent and HBOS (HBOS.L) 3.9 per cent lower.
Other financials sagged with insurer Legal & General (LGEN.L) down 4.6 per cent. The whole insurance sector has toiled under worries over solvency requirements as their share portfolio values crash with the equity markets.
Among telecoms shares, mobile phone group Vodafone (VOD.L) fell 3 per cent and rival mmO2 (OOM.L) lost 3.6 per cent, weighed down by fresh losses and a gloomy outlook from Swedish telecoms equipment maker Ericsson (ERICb.ST).
Oils took 25 points off the FT-SE 100 index, with Shell (SHEL.L) down 1.9 per cent and BP (BP.L) down 4.5 per cent.
The media sector was unsettled by a top management shakeup at AOL Time Warner (AOL.N), which is struggling with concerns about growth prospects and complex accounting issues.
Shares in publisher Pearson (PSON.L) slid 4.6 per cent while advertiser WPP (WPP.L) lost 6.6 per cent. Reuters (RTR.L) fell 4.2 per cent to 320 pence after investment bank WestLB recommended investors sell shares in the news and information group and set a price target of 250 pence per share.
Drugs were weak with AstraZeneca (AZN.L) down 4.6 per cent, reminded of generic drug competition after U.S. drug maker Eli Lilly (LLY.N) reported lower second quarter income and said sales of its Prozac antidepressant had plunged because of competition from cheaper copycat treatments.
Only a handful of stocks made it on to the FT-SE gainer's list, including Man Group (EMG.L) up 0.6 per cent on the view that its status as a hedge fund manager meant it was well-placed to make money out of falling markets.
Among the midcaps, shares in debt-laden Cookson Group Plc (CKSN.L) slumped 34 per cent after it said it would raise £277.5-million ($435.6-million U.S.) via a deeply discounted rights issue to reduce its bank borrowings.
Industrial parts distributor Electrocomponents (ECM.L) dropped 6.3 per cent ahead of its annual meeting.
The Midcap 250 index lost 1.4 per cent to 4,885.4, while the techMARK slid 2.8 per cent.
Stephen Hatton at online brokerage Deal4Free.com said the way could be open for fresh FT-SE losses if near-term supports failed after the FT-SE 100's three-day gain of 300 points from Tuesday's six-year low of 3,860 points.
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