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TOKYO -- The Great Tech Selloff in Japan continues.

Even though the

Nasdaq Composite

bounced higher overnight, fund managers continued to unload major Japanese technology stocks Thursday. There is talk in the market that many investors are pulling out of the Japanese tech-oriented mutual funds, triggering the demise of such shares as

Softbank

and

Hikari Tsushin

, traders said.

The key

Nikkei 225

index fell 239.16 points, or 1.2%, to 20,223.611, while the

Topix

, which includes all shares listed on the

Tokyo Stock Exchange's

first section, declined 37.37, or 2.2%, to 1657.68. The

Jasdaq

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small-cap index shed 2.38, or 2.5%, to 93.96, while the Nikkei

over-the-counter

index dropped 47.18, or 2.3%, to 1991.97.

Although major redemptions from technology funds have not officially been announced, traders speculated that fund managers were behind most of the damage to Softbank and Hikari Tsushin today. Although many experts believe Softbank looks to be nearing a bottom, Hikari shares could drop to around 25,000 yen, one trader from a large Japanese firm said. Softbank fell 3000, or 3.9%, to 73,500, while Hikari was ask-only at 53,800. (The TSE halts trades of shares where the bids and offers don't roughly match.)

Japanese companies may have to get used to the power of retail money, with billions of dollars worth of low-yielding post office savings account holdings coming due for reinvestment this year.

Sony

(SNE) - Get Sony Corp. Report

slipped 300, or 6.8%, to 4100 and

Canon

(CANNY)

shed 300, or 6.8%, to 4100.

All was not gloom among tech stocks, though, as pension fund managers picked up electronics makers with an Internet angle.

Hitachi

(HIT)

rose 33, or 2.9%, to 1310, while NEC

(NIPNY)

climbed 30, or 1.1%, to 2885.

Shares of telecom operators

KDD

and

DDI

jumped over 4% when

Toyota Motor

(TM) - Get Toyota Motor Corp. Report

said it would invest about 120 billion yen in the new company to be formed by the merger between KDD, DDI and privately held

Ido

.

The dollar eased slightly to around 104.83 yen.

Politics in Japan continued to take a back seat to what has been happening on Nasdaq. Japan's new prime minister

Yoshiro Mori

said he called U.S.

President Bill Clinton

and asked for an informal meeting as early as May. Although the takeover from former premier

Keizo Obuchi

hasn't made many equity investor nervous, traders are looking to parliamentary elections that must occur before mid-October for a stronger signal of which economic policies will be followed in the longer term. Snap elections may come as early as June.

Large institutional investors were reportedly taking a break in Hong Kong, where the

Hang Seng

index rose 172.95 points, or 1.1%, to 16,491.39. There was interest from day-traders in

China Telecom

(CHL) - Get China Mobile Ltd. Report

, up HK$2.50, or 4.2%, to 62.75.

Cathay Pacific

(CPCAY)

climbed 1.05, or 8.7%, to 13.10 as the firm continued to buy back shares between 11.90 and 20.00 today. Internet company

Tom.com

rose 45 cents, or 6%, to 8.00 after plunging 16.5% Wednesday.

With the Hang Seng inching toward its 50-day moving average of 16,800, traders noted that some profit-taking might happen Friday.