LONDON (CNNfn) - Asian markets retreated Thursday, with technology issues under pressure following another punishing sell-off on Nasdaq in the U.S a day earlier. Tokyo's leading index fell from a three-year high reached Wednesday, as declines for chip and electronics issues outweighed gains for some "old-economy" shares.
Japan's benchmark Nikkei index fell 306.79 points, or 1.5 percent, to 20,526.42, erasing Wednesday's gain but closing above session lows.
In late trading in Hong Kong, the Hang Seng index closed down 224.53 points, or 1.4 percent, at 16,279.64, also ending above the day's low point.
Singapore's Straits Times closed down 1.3 percent, or 28.51 points, at 2,163.9.
In the U.S. Wednesday, the Nasdaq plunged more than 7 percent, leaving it about 25 percent below the record high it set little more than a month ago. The 30-stock Dow Jones industrial average was also dragged lower by its technology components, falling 161.95 points to 11,125.13.
The dollar held its ground against the yen despite hints from a top Bank of Japan official the monetary policy panel may need to abandon its policy of near-zero interest rates - a tool used to spur economic recovery. That could reinforce yen-dominated securities and cause the yen to rise further.
The dollar was recently quoted at ¥105.84, up from a U.S. close of ¥105.74 Wednesday. The euro rose to ¥101.26 from ¥100.97 late Wednesday.
Tokyo chips tripped up
Among the titans of Japanese technology dragging on the Nikkei were top computer chip makers. NEC fell 6.9 percent as it announced plans to spend more than ¥100 billion ($945.1 million) to build a new chip plant within five years. In the same industry, Fujitsu fell 7.1 percent and Toshiba dropped 4.3 percent.
Technology bellwether Sony fell 4.7 percent and Hitachi shed 6.1 percent.
Internet shares were also under pressure. On the Tokyo Stock Exchange's new Mothers markets for high-tech start-ups, Internet Research Institute tumbled 13.7 percent, Livin' on the EDGE Co fell 18.9 percent and Cyber Agent lost 18.7 percent.
Traders said there were worries that Internet investors Softbank and Hikari Tsushin, both of which recently revised down their earnings forecasts, may sell their shareholdings in firms listed on Mothers. Softbank sank 7 percent, or limit-down, despite announcing late Wednesday it would conduct a three-for-one share split on June 23.
For the ninth straight trading day, shares of mobile phone and Internet investor Hikari Tsushin fell limit-down, tumbling 7.5 percent to 36,800 yen.
However, Sumitomo Chemical added 6 percent and Mitsui Chemical rallied 8.5 percent as demand for "old-economy" stocks revived. Retailer Sogo added 3.9 percent
In Hong Kong, Cable & Wireless HKT, which is set to be purchased by Internet company Pacific Century CyberWorks, slumped 6 percent, after soaring 13.7 percent Wednesday when trading in PCCW shares was suspended.
Hutchison Whampoa fell 3.0 percent and parent Cheung Kong (Holdings) slipped 2.4 percent. PCCW, which isn't part of the Hang Seng, rose 7.4 percent, bolstered by its $3 billion joint venture, announced a day earlier, with Australia's Telstra.
China Telecom rose 0.1 percent, after earlier falling as much as 5.6 percent. The company reported a surprise 30 percent drop in 1999 profit because of a bigger-than-expected 8.24 billion yuan ($1 billion) write-off on older network equipment.
In other markets
Taiwan stocks closed sharply lower, with the benchmark TAIEX index shedding 2.5 percent as the Nasdaq's troubles pounded the index's heavily weighted electronics shares. Taiwan Semiconductor Manufacturing slipped 4 percent, but financial-services stocks mostly rose.
Australia's All Ordinaries fell 1.6 percent, with media giant News Corp. closing down over five percent to its lowest close since Feb. 3.
Kuala Lumpur's KLSE Composite index dropped 0.7 percent and Manila's PHS Composite shed 1.1 percent. But Jakarta's JSX index edged into the black, with a gain of 0.1 percent.
The South Korean market was closed on Thursday for an election, while the Thai market was shut for a holiday. 
-- from staff and wire reports
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