Baidu-spurred tech slump raises bubble fears

By Sophie Taylor and Duncan Martell

SHANGHAI/SAN FRANCISCO (Reuters) - Technology stocks tumbled on Thursday as a sell-off in shares of Chinese Internet company Baidu.com (BIDU.O: Quote, Profile, Research, Stock Buzz) fuelled concerns that the recent tech rally may be coming to an abrupt end.

The tech-heavy Nasdaq index .IXIC dropped 1.4 percent on the day, down 39.41 points, after a JPMorgan report spooked investors. Baidu slumped 10 percent to $308.78, while other high-flying stocks including Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) and Blackberry maker Research In Motion (RIMM.O: Quote, Profile, Research, Stock Buzz) also fell.

JPMorgan said it expected Baidu.com Inc to report third-quarter revenue in line with a Wall Street consensus, but slightly below the investment bank's own previous target.

Baidu fell a further 2 percent in after-hours trade.

MSCI's index of IT stocks in Asia Pacific, excluding Japan, .MIAPJIT00PUS was off 1.6 percent by 12:20 a.m. EDT on Friday, in line with a broader drop in Asian stock markets.

"You are seeing the classic bubble being burst in the best-performing momentum names such as Baidu.com, Apple and RIM," said Tim Biggam, lead options strategist at online brokerage thinkorswim in Chicago.

"Once these started falling, the selling begat selling as everyone headed for the exits at one time.

"This is a mini-version of what we saw at the height of the dot-com bubble in late 2000 and early 2001," Biggam said. "It will be interesting to see what happens on Friday."