Japan's Nikkei 225 Stock Average fell as Nippon Telegraph & Telephone Corp tumbled after Softbank Corp's plan to cut phone bills triggered a downgrade on NTT by Deutsche Bank AG.

　　"The news is negative for NTT's business as it's likely to lose customers to Softbank," said Hajime Yagi, who manages US$2 billion as senior fund manager at Meiji Dresdner Asset Management Co in Tokyo. "Softbank trying to reduce fees will have a significant impact on NTT's profitability."

　　The Nikkei shed 0.2 percent to 11,184.53 at the close in Tokyo. The broader Topix index was little changed at 1,138.02. Mizuho Financial Group Inc led gains among banks after saying it will repay public funds this month, prompting Merrill Lynch & Co to raise its rating on the stock.

　　LG.Philips LCD Co and AU Optronics Corp paced declines in South Korea and Taiwan after the Yonhap News agency reported on Sunday that the European Commission plans to impose tariffs on imports of liquid-crystal display monitors.

　　Hong Kong stocks climbed for a second day. China Life Insurance Co, the nation's largest insurer, advanced after saying market share and premium income rose in the first half.

　　The Morgan Stanley Capital International Asia-Pacific Index, which tracks more than 900 companies in the region, shed 0.3 percent to 89.23, ending a nine-day, 5 percent gain. Indexes in Singapore and Thailand also fell while those on China's mainland, the Philippines and Australia were little changed. All others in the region advanced.

　　An index of Japanese telecommunications stocks was the biggest drag on the Topix index. NTT, Japan's former telephone monopoly, dropped 5.7 percent to 479,000 yen (US$4,355). The decline was the biggest since July 26.

　　Softbank on Saturday said it plans to offer cheaper monthly fees for fixed-line phone services through Japan Telecom Co, the nation's third-largest phone company that it bought in July.

　　After the close of trading in Tokyo, Softbank said it will provide fixed-line phone service in December that is 200 yen less than NTT's. Shares of Softbank advanced 2.8 percent to 4,710 yen.

　　Tetsuro Tsusaka, an analyst at Deutsche Securities in Tokyo, lowered his rating on NTT to "hold" from "buy" in a note to clients dated yesterday. The "sanctuary of NTT's basic fixed-line service charges is set to be invaded," he said. He also cut his 12-month estimate price on NTT to 450,000 yen from 600,000 yen.

　　Separately, NTT's rating was reduced to "hold" from "buy" by Toru Hosoi, an analyst at Nikko Citigroup. He cut his price estimate on the stock to 530,000 yen from 710,000 yen.

　　KDDI Corp, Japan's second-largest mobile-phone operator, slumped 2.9 percent to 545,000 yen. Credit Suisse First Boston cut its rating on the stock to "neutral" from "outperform," citing a recovery at NTT DoCoMo Inc, its bigger rival. DoCoMo, a unit of NTT, shed 1.5 percent to 204,000 yen.

　　Mizuho, Japan's largest lender by assets, jumped 4.5 percent to 444,000 yen. Mizuho, which owes 2.2 trillion yen of public funds it received in 1998 and 1999, said in a statement on Friday after the market closed that it will repay the amount by buying back some of the shares the government holds.

　　Yoshinobu Yamada, an analyst at Merrill Lynch, raised his rating on the stock to "buy" from "neutral" in a note to clients following the announcement.

　　Bank of Yokohama Ltd advanced 3.1 percent to 664 yen. The regional bank also said it would buy back preferred shares from the government agency to pay back public funds.

　　South Korea's Kospi index fell 0.6 percent to 805.19. Taiwan's Taiex index declined 0.2 percent to 5,788.94.

　　LG.Philips LCD, the world's second-largest maker of flat-panel displays used in computers and televisions, plunged 5.6 percent to 34,600 won (US$30.02). AU Optronics, Taiwan's largest maker of flat-panel displays, dropped 4 percent to 43.60 New Taiwan dollars (US$1.28).