Asian Markets Update: Asia Cools Down After Four-Day Rally

TOKYO -- After rising for four consecutive days, it was high time for Asian markets to take a breather. With the key Nikkei 225 index jumping almost 6% over the past few days, local dealers took profits across the board, sending the index marginally lower in low volume.

With the fixing of special quotation on June Nikkei 225 futures and options, as well as the release of 1Q gross domestic product on Friday, activity in the cash market is close to nil, traders said.

The Nikkei 225 index fell 31.71 to 17,170.08, while the Topix index, which includes all shares listed on the Tokyo Stock Exchange's first section, lost 6.78 to 1588.66. The Jasdaq small-cap index climbed 0.20 to 92.05, while the Nikkei over-the-counter index shed 2.83 to 1814.07.

Portfolio managers, largely absent in Monday's rally, were popping up here and there, traders said, which helped lift sentiment later on in the day. Dealers took advantage of lower share prices in off-hour basket trading (which occurs during the market's lunch break in Tokyo), helping large-cap shares erase much of the losses incurred during the first hour of trading.

Most large-cap tech, electronics and Internet shares were near flat or marginally lower. Toshiba fell 22 yen, or 2.0%, to 1104, Sony (SNE Quote) shed 20 to 11,100, while Oki Electric gained 14, or 1.7%, to 829. Also bucking the trend was Hikari Tsushin, up 500, or 10.9%, to 5100 and its unit Crayfish (CRFH Quote), up 1 million, or 15.9%, to 7.3 million.

Fujitsu (FJTSY Quote) climbed 80, or 2.4%, to 3380 after announcing a joint venture with U.S. company Lucent Technologies (LU Quote) to build advanced network equipment using Internet Protocol (IP) technology. Also gaining ground was Sega Enterprises (SEGNY Quote), up 80, or 4.2%, to 1970. Sega said it hooked up with Motorola (MOT Quote) to develop new mobile phones that can access the Internet.

Internet conglomerate Softbank rose 850, or 4.3%, to 20,800 after the Japanese government gave the official go ahead for the firm to buy out the nationalized Nippon Credit Bank. Softbank said it was currently negotiating with Lehman Brothers (LEH Quote), Chase Manhattan (CMB Quote), and UBS (UBS Quote) to invest approximately 20 billion yen each in the new bank.

With the focus on the euro, the dollar lost ground against the yen and fetched 107.06.

With markets in Hong Kong, South Korea and Taiwan closed for a holiday, Singapore saw little activity. The Straits Times index gained 19.29 to 2001.72 and traders said the upside was capped by investors dumping Malaysian shares listed on the Singapore exchange. The selling was mostly from investors who bought these shares months back, and were disappointed that fund managers did not buy more Malaysian shares after the country was re-instated in the Morgan Stanley Capital International's index in late May.