TOKYO -- Foreign selling in large cap technology shares brought the key

Nikkei 225

index to its lowest close in almost eight months Friday, and without a lot of bottom fishing on the horizon, the market looks extremely weak.

Given the volatility in U.S. markets, along with the earnings rush in Tokyo, large investors are likely to stay away from the market until at least June. Traders say the Nikkei 225 will likely drop to its psychological 16,000 support mark before a lot of investors rush back in.

The

Nikkei 225

fell 173.46 points, or 1%, to 16,858.17, its lowest close since September 27 last year. The

Topix

index, which includes all shares listed on the

Tokyo Stock Exchange's

first section, lost 27.77, or 1.7%, to 1578.37, the

Jasdaq

small-cap index fell 1.78, or 2%, to 86.56, while the Nikkei

over-the-counter

market lost 41.06, or 2.2%, to 1827.36.

Foreign investors, wary of

Nasdaq's

drop overnight and the market's ongoing volatility, were reportedly shifting out of tech stocks and looking for cheaper blue chips, traders said. This exacerbated sales by local brokers and individual investors.

"Everyone wants the high-valued tech stocks to drop another 5% before we can justify buying these shares again," said one trader at an U.S. house. "So instead, we're shifting out into cheaper, domestic-oriented shares and waiting around for tech shares to get cheap again. The selling you're seeing doesn't mean we are exiting the market at all."

Fund managers, although reluctant to say it in public, have also expressed their desire for Japanese tech shares to fall a bit further before they will commit large lots of cash.

Sony

(SNE) - Get Report

slipped 660 yen, or 5.7%, to 10,830,

Softbank

fell 2000, or 9.7%, to 18,600, while

Nippon Telegraph & Telephone

(NTT)

fell 20,000, or 1.5%, to 1.28 million. After healthy earnings, however,

Kyocera

(KYO)

climbed 1530, or 10.9%, to 15,600, while

Mitsubishi Electric

gained 37, or 3.6%, to 1075.

The greenback fell slightly against the yen and fetched 108.33.

Hong Kong's

Hang Seng

index gained 155.66 points to 14,478.26, as investors covered short positions ahead of the weekend.

China Telecom

(CHL) - Get Report

rose HK$1.50, or 3.0%, to 51.75 and

Cable & Wireless HKT

(HKT)

gained 0.50, or 2.7%, to 18.75.

Ahead of the weekend's inauguration of Taiwan's president-elect Chen Shui-bian, Taiwan's

TWSE

index rose 32.56 to 9119.77.

Korea's

Kospi

index rose 17.73, or 2.5%, to 730.68, as investors shook off news that Prime Minister Park Tae-joon resigned Friday over questions about his personal wealth, as well as over possible tax evasion while he was the chairman of

Pohang Iron & Steel

(PKX) - Get Report

during the late 1980's and early 1990's.