TOKYO -- There was a time when Japanese equity traders mirrored what their foreign counterparts did in the U.S. overnight. If the

Dow Jones Industrial Average

was up, so was the

Nikkei 225

index.

The close ties may be fraying, but foreign investors still have the upper hand in what goes on in the Tokyo markets. U.S. hedge funds, which have been selling large tech plays over the past two weeks, continued to shed market darlings such as

Hikari Tsushin

and

Softbank

, dragging the overall market lower.

The benchmark

Nikkei 225

shed 104.46 to 19,662.33, while the

Topix

index, composed of all shares listed on the

Tokyo Stock Exchange

's first section, dropped 17.37, or 1.1%, to 1643.77. The

Jasdaq

small-cap index rose 4.96, or 4.45, to 118.00, while the Nikkei

over-the-counter

shares climbed 70.29, or 2.9%, to 2468.58.

Its been a tough few weeks for Toyko's tech and telecom crowd with the sectors getting beaten down. Hikari Tsushin fell 15,000, or 10.8%, to 124,000 and Softbank, slid 16,000, or 12.3%, to 114,000. Traders said the selling in Hikari Tsushin also came from Japanese dealers, who were moving on an article about the firm in magazine

Bungei Shunju

. The magazine, which will hit the stands Friday, reportedly does not paint a pretty picture about the firm's business tactics.

Domestic investors are also in the shedding mode, likely to book profits before the March 31 fiscal year end.

Hitachi

(HIT)

shed 15, or 1.1%, to 1415,

Fujitsu

slipped 200, or 5.6%, to 3390, while

Sony

(SNE) - Get Report

shed 780, or 2.7%, to 28,080.

TheStreet Recommends

Nippon Telegraph & Telephone

(NTT)

slipped 30,000, or 2.0%, to 1.47 million after reports that the government and the ruling

Liberal Democratic Party

had urged the telecom giant to reduce its current 67% stake in

NTT DoCoMo

mobile phone unit to under 50%. That might force competition between NTT DoCoMo and NTT's regional units.

On the upside,

Oracle Corporation Japan

, the Japanese unit of

Oracle

(ORCL) - Get Report

, jumped 10,000, or 12.4%, to 91,000 after the

Nihon Keizai Shimbun

business daily reported the OTC firm would jump up to the TSE's first section in April. The report also said Oracle Japan would offer 10 million additional shares.

After a surprise

Bank of Japan

intervention in the currency market Wednesday, the greenback stood around 106.87 against the yen in listless trading. Although U.S. funds were shedding the dollar early in the day, Monday's release of Japan's fourth quarter gross domestic product data is capping further selling, dealers said. Economists predict Japan will not post any growth during the October-December period, which will technically signal Japan is back in a recession.

Hong Kong's

Hang Seng

index fell 314.40, or 1.8%, to 17,637.03 as profit taking punched through after the index reached a new intra day high of 18,249.86.

Hutchison Whampoa

(HUWHY)

closed flat at HK$88.00 after local reports that said it will set up a joint venture with a U.S. venture capital firm

Internet Capital Group

to buy and sell web portals in Asia.

With investors giddy over German bank consolidations, rumors were rife over

HSBC

(HBC)

, up 0.50 to 136.50. Talk may have started from an article in German newspaper

Die Welt

, which reportedly said HSBC is gearing up for a hostile bid for

Commerzbank

(CRZBY)

. International investors had bought Commerzbank shares through open market, to in turn pass them over to HSBC, the report said without citing any named sources.