LONDON (CNNfn) - Japan's blue-chip equity index jumped to a 40-month high Wednesday on renewed evidence of the country's economic recovery, though most Asian markets fell in the wake of sharp declines among U.S. shares in the previous session.
Tokyo's Nikkei 225 index climbed 332 points, or 1.6 percent, to close at 20,706.65 in a broad-based rally that included both technology and more traditional industrial stocks. A government report showing that manufacturing output climbed 3 percent in February from the previous month brightened the market mood.
 While Tokyo set records, Hong Kong's blue-chip Hang Seng index slid back from its recent peak, closing down 205 points, or 1.1 percent, at 18,096.32 after two consecutive record closes. The Straits Times index in Singapore was equally weak, closing off 1.5 percent at 2,174.24 as its technology components retreated after recent gains.
In the U.S. Tuesday, investors fled the tech-heavy Nasdaq composite index, which fell 124.56 points, or 2.5 percent, to 4,834. The Dow Jones industrial average shed 89.74 to 10,936.11, matching the loss it posted Monday. The broader S&P 500 dropped 16.13 to 1,507.73.
 In the currency markets Wednesday, the yen firmed against the dollar, rising to ¥105.96 per dollar from ¥105.75.
The fourth successive rise in Tokyo shares was driven by the chain of new investment funds that have poured money into the market over the past two weeks.
High-tech and Internet stocks rebounded from a month of declines brought on Japanese institutions' tendency to book profits before they close their accounts for the fiscal year end.
Leading the charge Wednesday, Internet investor Softbank, a flagship of the so-called "new Japan", rose 5.8 percent to ¥91,500, while rival Hikari Tsushin surged 7.3 percent. Consumer electronics giant Sony Corp. rose 4.6 percent.
Industrial stocks continued their recent good form, with steel maker NKK adding 3.1 percent. In the telecom sector, NTT added 2.5 percent and cellular operator NTT DoCoMo rose 1.6 percent. Among financial stocks, Sakura Bank was the Nikkei's best performer, gaining 2.8 percent after it announced plans to develop an online bank with Sony.
Declines in telecom and financial shares depressed Hong Kong's Hang Seng. China Telecom (Hong Kong) fell 2.3 percent, Cable & Wireless HKT slumped 3.8 percent and SmarTone ended down 3.4 percent. Hong Kong's largest bank HSBC Holdings dropped 1.1 percent.
In Singapore, technology stocks were the main driver of the decline on the Straits Times index, with Creative Technology sliding 6.5 percent to reverse most of its 8 percent surge in the previous session. Electronic circuit designer Datacraft was another casualty of the sector sell-off, closing down 8.2 percent.
 Among smaller markets, the Kospi index in Seoul was the region's best performer, ending up almost 2 percent at 908.51, and the JSX index in Jakarta nosed narrowly ahead to end at 589.59.
Taiwan's TAIEX index closed down 0.5 percent at 9,805.69 to end a run of four successive gains. The KLSE Composite in Kuala Lumpur, Set 50 in Bangkok and PHS Composite in Manila all closed narrowly lower.
In Sydney, the All Ordinaries index slipped 12.3 points to end at 3,228.5. 
-- from staff and wire reports
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