Shares in Sony fell in Tokyo overnight after Dell, the computer maker, announced the recall of 4.1 computer batteries made by the Japanese group and a US safety watchdog said it is reviewing all Sony-made computer lithium-ion batteries for fire hazards.

Sony shares closed 1.2 per cent lower at 5,150 yen. The Nikkei share average rose 1.61 per cent, ending above 16,000 for the first time since May.

Analysts have estimated the cost of the recall, the largest ever in the computer industry, to Sony at around $180 million.

Dell said on Monday that it was recalling the components after six reports of the batteries overheating and causing damage and after pictures of one Dell laptop exploding at a conference in Japan were circulated on the internet.

Nobody was hurt in the incidents.

Shares in Dell slipped 0.4 per cent to $22.08 in after-hours trade in New York.

A spokesman for the US Consumer Product Safety Commission said the body was reviewing all batteries made by Sony "to ensure that no other consumers are in harm's way"

Sony batteries are also used in computers made other manufacturers, including Apple and Hewlett Packard.

Yesterday Apple said it was reviewing its batteries. H-P told Times Online it had no plans for a recall and that it believed the problems were limited to Dell.

Similar batteries are also used in mobile phones, digital cameras, video cameras and digital music players

Analysts added that the central issue for Sony was that of defending its reputation and that investors would likely resist the stock until more details were known.

Last night a Dell spokesperson was unable to clarify the exact problem was with the recalled batteries.

Experts said possibilities include a process dubbed "thermal runaway", which means once a faulty lithium-ion battery hits a certain temperature – which would differ from model to model – it begins to "self heat", possibly until it catches fire or explodes.

Another possibility is that short circuits were caused by impurities within the battery breaking down the isolator which divides its anode and cathode.

Dell's recall covers Sony laptop batteries sold from April 2004 through July 18. Last night Dell was unable to say how many had been sold in the UK. Around 2.7 million were sold in the US.

For details on faulty Dell models and how to exchange batteries click here.

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