Nikkei Falls 0.7 Pct as Technology Shares Hit

High-tech shares were hit as concerns had arisen about Asian high-tech shares after Baidu.com`s performance on Wall Street.

The Nikkei slid 0.7 percent on Friday, dragged lower by high-tech stocks such as Tokyo Electron on a brokerage downgrade and after China's Baidu.com Inc tumbled on the tech-heavy U.S. Nasdaq.

Shares of Fast Retailing dropped after its profit fell more than expected, while Sony Corp lost ground after its mobile phone joint venture with Ericsson posted a year-on-year fall in pretax profit for July-September.

Banks such as Mizuho Financial Group Inc also weighed on the market after Lehman Brothers lowered its target prices for these issues.

"The Nikkei extended losses a bit in the afternoon following a drop in other Asian markets as investors are becoming increasingly nervous about recent market rallies, though sentiment is still bullish," said Soichiro Monji, chief strategist of the equity management department at Daiwa SB Investments.

"But I tend to think the Nikkei did pretty solidly, considering it lost only about 127 points after rallying nearly 300 points (on Thursday)."

Hiroaki Kuramochi, managing director at Bear Stearns, said high-tech shares were hit as concerns had arisen about Asian high-tech shares after Baidu.com's performance on Wall Street.

Japanese tech shares were hurt by Goldman's downgrade on top of that, he said.

Baidu.com, China's top Web search firm, plunged on Nasdaq on Thursday after JPMorgan Chase & Co. predicted Baidu's third-quarter revenue would be slightly lower than estimated.

The benchmark Nikkei shed 127.81 points to finish at 17,331.17. On Thursday, it had its highest finish since July 26 at 17,458.98.

The TOPIX index shed 1.1 percent or 18.04 points to end at 1,659.48. It logged its highest close since Aug. 9 at 1,677.52 the previous session.

Trade was modest with 1.9 billion shares changing hands on the Tokyo exchange's first section, on par with the last month's daily average.

Declining stocks outnumbered advancing ones by nearly four to one.

HIGH-TECH STOCKS HIT

High-tech shares were one of the biggest drags on the market. Tokyo Electron fell 1.2 percent to 7,300 yen, while Canon Inc retreated 1.9 percent to 6,170 yen and Toyota Motor Corp slipped 1.9 percent to 6,560 yen.

Chip-related shares Nikon Corp, Tokyo Electron and Dainippon Screen dropped after Goldman Sachs lowered its ratings saying it has turned cautious on the sector on expected profit declines in the 2008/09 business year.

Nikon, which was cut to "sell" from "neutral," dropped 8 percent to 3,910 yen, while shares of Dainippon Screen, which was downgraded to "sell" from "buy," lost 8.6 percent to 692 yen.

Tokyo Electron was lowered to "neutral" from "buy."

Shares of Fast Retailing lost 6 percent to 7,060 yen due to the clothing retailer's bigger-than-expected decline in operating profit, raising questions about its growth strategy and profit prospects.

Shares of Sony fell 4.3 percent to 5,530 yen.

Mizuho declined 3.7 percent to 677,000, while Sumitomo Mitsui Financial Group (SMFG) lost 2.7 percent to 927,000 yen and Mitsubishi UFJ Financial Group shed 0.7 percent to 1,170 yen.

"Bank shares have continued to rise, but we do not believe they have much room to climb further," Lehman said. "Stock prices based on fundamentals will become increasingly important, in our view."

The brokerage firm cut the target price for Mitsubishi UFJ to 1,600 yen from 2,000 yen and lowered that for Mizuho to 800,000 yen from 1.1 million yen. SMFG's target price was cut to 1.1 million from 1.3 million yen.