TOKYO -- Despite some excitement over a possible mobile-phone content deal between

NTT DoCoMo

(NTT)

and

America Online

(AOL)

in the U.S., most Japanese shares fell lower as pressure from a glut of supply due in August hurt sentiment.

A few high-tech shares bounced higher, however, as traders woke up to a report in the

Nihon Keizai Shimbun

, Japan's leading business daily, that said NTT DoCoMo is close to signing a deal with AOL to distribute AOL content to global mobile-phone users. Both DoCoMo and AOL Japan declined to confirm or deny the report.

The

Nikkei 225

index shed 70.98 to close at 16,502.61, while the

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, rose 2.08 to 1504.53. The

Jasdaq

small-cap index fell 0.27 to finish at 78.53, while the Nikkei

over-the-counter

index lost 2.17, ending at 1652.39.

With 18 public offerings scheduled for August, traders said the market was worried that supply will outstrip demand in a market already depressed. Many local investors are already on the sidelines because they fear a possible interest rate rise and the emergence of more corporate bankruptcies over the next few months.

News that NTT DoCoMo was expanding its overseas operations was positive enough for shares to rise 90,000 yen, or 3.1%, to 2.97 million ($27,195.31). Although the Nikkei newspaper failed to mention any sources, the report said the deal could be sealed as early as next month.

Sony

(SNE) - Get Report

rose 260, or 2.5%, to 10,710 before its first-quarter earnings were released after the market closed. Sony said the firm lost 88.29 billion yen during the first quarter due to unexpected losses from its U.S. movie unit. The loss, however, was slightly better than what the market had previously expected, about 100 billion yen.

Other large-cap tech firms were higher, including

Fujitsu

, up 50, or 1.7%, to 3050, while

NEC

(NIPNY)

rose 90, or 3.1%, to 2970.

The greenback inched higher against the yen to recently fetch 109.21.

Hong Kong's

Hang Seng

index jumped 244.89, or 1.4%, to close at 17,620.23 as investors speculated the territory's major banks will post healthy earnings results this week. Scheduled to report first-half earnings on Monday,

HSBC

(HBC)

rose HK$2.50, or 2.5%, to 104.50, while

Hang Seng Bank

soared 3.75, or 4.6%, to 85.25.

Telco shares also fared well, with

China Mobile

(CHL) - Get Report

rising 1.50, or 2.3%, to 67.75 and

Hutchison Whampoa

climbing 1.50, or 1.3%, to 115.50.

Elsewhere in Asia, Korea's

Kospi

index rose 6.20 to 743.84, while Taiwan's

TWSE

index gained 61.15 to 7961.54.