Chip stocks weigh on Asian markets

HONG KONG, Feb 22 (Reuters) Asian chip stocks such as Samsung Electronics and Toshiba eased on Wednesday following a broker downgrade of the sector, keeping a lid on regional markets.

Citigroup on Tuesday cut its weighting on the semiconductor and semi-equipment industry group to ''market weight'' from ''overweight'', citing the potential that capacity growth could hurt chip pricing and bite into margins.

At 0020 GMT, Tokyo stocks had shed 0.64 percent as Internet communications conglomerate Softbank, chip equipment maker Advantest Corp. and Tokyo Electron fell. Toshiba sagged 0.9 percent.

In South Korea, declines in Samsung Electronics and LG Electronics helped pushed the benchmark KOSPI down 0.05 percent.

''All factors point to weaker markets. Yesterday, U.S.

stocks fell, oil prices rose above a barrel, and the Federal Reserve could continue raising interest rates in the U.S.,'' said Kim Hak-kyun, an analyst at Goodmorning Shinhan Securities.

But steel maker POSCO climbed 0.9 percent after the official Shanghai Securities News said China's top steel maker, Baoshan Iron&Steel Co. Ltd., seen as an industry benchmark, planned to raise steel prices by about 10 percent in the second quarter.

Australia's key S&P/ASX 200 index edged 0.17 percent higher as gains in CSL and Australia and New Zealand Banking Group Ltd. helped counter a 3.1 percent fall in mining giant Rio Tinto, which traded ex-dividend.

Shares in CSL jumped 6.7 percent after the world's top maker of human plasma products posted a 34 percent rise in first-half profit and lifted its full-year outlook.

On Tuesday, U.S. blue chip stocks sagged 0.42 percent amid renewed worries about higher interest rates while the tech-heavy Nasdaq Composite Index shed 0.85 percent.

Minutes of the Federal Reserve's Jan. 31 meeting showed policy makers felt the 14th straight increase in interest rates last month put borrowing costs near where they needed to be, but agreed they could not rule out more hikes given inflation risks.

REUTERS PDS RAI0629