Nikkei ends at 5-mth low, tech shares lead falls

By Taiga Uranaka

TOKYO (Reuters) - Japan's Nikkei average fell 1 percent to a five-month closing low on Thursday, dragged down by Tokyo Electron Ltd (8035.T) and other tech shares as worries grew about tech spending in the face of increasing economic gloom.

Shares of glass makers like Nippon Electric Glass (5214.T) tumbled after rival Corning Inc (GLW.N) cut its outlook while shippers lost ground on a drop in a major freight index.

"High-tech shares were sold, following their U.S. peers, and they weighed heavily on the index," said Katsuhiko Kodama, senior strategist at Toyo Securities.

"There are many worrying factors in the market, such as the global economic outlook and the credit crunch."

OECD forecasts showed on Tuesday Europe's economy is slowing more sharply than predicted, with Britain near recession, and the United States and Japan faring little better.

The benchmark Nikkei .N225 ended down 131.93 points at 12,557.66, the lowest close since March 31. The broader Topix fell 1.6 percent to 1,201.65.

Japan's economics minister, Kaoru Yosano, who has promoted fiscal reform, said he planned to challenge frontrunner Taro Aso in the race to become the next prime minister, setting the stage for a clash over economic policy.

Some market participants said they feared a potentially divided ruling party would leave the new leader with less clout.