TOKYO, Oct 1 (Reuters) - Japan's Nikkei average is likely to dip on Thursday after U.S. shares fell due to a surprise contraction in an index of Midwest business activity.
Investors will also take cues from the Bank of Japan's tankan business sentiment survey due at 8:50 a.m. (2350 GMT, Wednesday), although the market reaction is expected to be mild unless the data deviates greatly from economists' forecasts.
The tankan is expected to show that big manufacturers' business mood improved to its least pessimistic since December.
One stock to watch may be Japan Airlines Corp (JAL) after Japan's prime minister and transport minister said on Wednesday the government was ready to support it, aiming to dispel worries over the viability of the loss-making carrier. "The Nikkei will probably start lower and then be stuck in range-trading," said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities. The yen's recent strength and caution ahead of economic indicators such as U.S. jobs data on Friday are likely to make investors hesitant to buy Tokyo shares actively, Nishi said.
Nikkei futures traded in Chicago ended Wednesday at 10,065.00, down 0.4 percent from the Osaka close.
The benchmark Nikkei is likely to move between 9,950 and 10,150 on Thursday, Nishi said. It rose 0.3 percent to 10,133.23 on Wednesday.
The yen stood at 89.78 yen to the dollar on Thursday. The yen hit an eight-month high against the dollar of 88.23 yen on trading platform EBS on Monday.
Many Japanese exporters have set their exchange rate assumptions for the dollar around 90-95 yen for the current fiscal year to March.
The impact of a stronger yen on earnings of exporter companies is a concern for market players as a stronger Japanese currency eats into exporters' profits when they are repatriated. > Wall St slips on Chicago PMI, but Q3 ends strong > Dollar falls as recovery hopes dim safe-haven demand > Weak data brings shorter debt back into vogue > Gold reclaims $1,000/oz on weak dollar, oil rally > Oil jumps over 5 pct, eyes gasoline demand STOCKS TO WATCH
-- Mitsubishi UFJ Financial Group
Mitsubishi UFJ Financial Group said on Wednesday it will write down 28 billion yen worth of goodwill for the year to March 2010, citing the share price falls of subsidiary companies.
-- Kobe Steel
Kobe Steel said on Wednesday that it had raised its group operating profit forecast for the business year to next March to 15 billion yen from its previous forecast of 5 billion yen. The steelmaker now expects a group net loss of 35 billion yen for the year to next March, less than its previous forecast for a 45 billion yen loss.
-- Seven & I Holdings
Seven & I Holdings is considering closing around 30 Ito-Yokado Co stores by February 2013 in a bid to quickly turn around the supermarket operator's earnings, the Nikkei business daily said on Thursday. (Reporting by Masayuki Kitano; Editing by Hugh Lawson)