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Mori gloom, tech swoon rattle Asia markets

Ailing Asian stock and currency markets suffered a double blow on Tuesday after more earnings alerts from the United States hit tech stocks and Japan's deeply unpopular prime minister survived a confidence vote.

Yoshiro Mori's slim victory during the early Tuesday vote knocked Japanese stocks to 20-month lows and squeezed bond prices. Late on Monday night when it became clear Mori would likely win, the yen hit an eight-and-a-half month low before recovering a bit of ground.

Analysts and investors had been hoping for a more reform-minded leader to take charge in Japan and end a long period of political uncertainty in the world's second-largest economy.

A 5 per cent plunge on the Nasdaq further hurt regional markets after a leading Wall Street brokerage cut its investment rating for a number of high-tech heavyweights.

But Taiwan seemed to ignore the tech sell-off, rising 5.26 per cent to 5,100.18 points by 0400 GMT -- after the benchmark TAIEX fell 6.23 per cent on Monday.

Tokyo's key Nikkei average recovered some ground by the early afternoon and was down 229.50 points or 1.58 per cent at 14,302.15 after hitting 14,211.03.

The yen had strengthened a little to 109.82/87 after touching 110.35, an 8- month low, in the run-up to the vote. Some dealers expected the yen to weaken again through 110.

"It's the worst scenario that could happen," said a dealer at a Japanese commercial bank. Analysts said Mori's victory looked hollow and he might have to resign soon due to his widespread unpopularity.

On Wall Street, Morgan Stanley Dean Witter cut its rating of Juniper Networks Inc and several other heavyweights, sending the Nasdaq plunging. It closed down 151.55 points or 5.01 per cent to 2,875.64, its lowest level since October 1999 and down 29 per cent for 2000.

"It's two-thirds earnings and one-third election," said David Sowerby, market strategist at Loomis Sayles, referring to the unresolved US presidential election.

Hong Kong's Hang Seng Index fell sharply at the open as investors sold tech and telecom issues. By 0406 GMT, the index was down 1.85 per cent at 15,062.02 after an early low of 15,013.82.

Leading Internet telecom firm Pacific Century CyberWorks fell to a new year low of HK$5.50 before trading at HK$5.55, down 2.63 per cent.

In Seoul, investors saw nothing but gloom.

A political stand-off and the won's slide against the dollar triggered a three percent fall on the benchmark KOSPI, while renewed earnings fears for tech stocks pushed the KOSDAQ over-the-counter market down more than 3.5 per cent.

Banking shares lost ground on worries over a stalemate in the South Korean National Assembly that threatens key reform bills. The dispute helped send the won falling to 12-month lows near 1,170 before a state-owned bank stepped, in driving the currency to 1,163.5.

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