TOKYO, June 17 (Reuters) - Japan's Nikkei stock average is likely to edge lower on Wednesday after mixed U.S. indicators reignited doubts about how fast the recession is easing, with exporters under pressure from a stronger yen.
A rebound in U.S. housing starts in May pointed to some stabilisation in that sector, but industrial production fell 1.1 percent and capacity utilisation slumped to its lowest level on records dating back to 1967.
The benchmark Nikkei fell 2.9 percent on Tuesday for its worst day in more than two months, and while market analysts said further falls were likely there was little change in the overall rebound trend.
"The economy is definitely improving -- after all, the Nikkei rose as far as 10,000 from just over 7,000 in March, which is quite substantial," said Yoku Ihara, manager at the investment information department of Retela Crea Securities.
"What we're seeing now is just the market taking a natural break."
Others noted that despite some worry about U.S. indicators and whether the recession is easing, financial institutions and credit markets are in better shape than when global stock markets slid to their lows earlier this year, and so no substantial falls are expected.
Market analysts said the Nikkei is expected to move between 9,600 and 9,800, with support from the 25-day moving average around 9,560. It closed at 9,752.88 on Tuesday.
Pointing to a lower open, Nikkei futures traded in Chicago edged down 0.4 percent from the Osaka close of 9,770. STOCKS TO WATCH
-- Sanyo Electric Co
Sanyo said car makers in the United States, Japan and Europe have agreed to buy its auto-use lithium-ion batteries, as it looks to take advantage of growing demand for hybrid cars.
-- Daiwa Securities Group Inc
Daiwa, Japan's second-largest broker, will buy a real estate management unit of KK DaVinci Holdings to expand its property business, three sources familiar with the matter said.
The Nikkei business daily reported that Daiwa would invest 10 billion yen in the deal.
-- Honda Motor Co
Honda plans to periodically issue asset-backed securities in the United States to accommodate the expected recovery in car sales and longer-term funding needs, the Nikkei business daily said. (Reporting by Elaine Lies; Editing by Chris Gallagher)