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Nikkei seen lower on Wall St, earnings awaited

Published 10/25/2009, 07:31 PM
Updated 10/25/2009, 07:33 PM
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TOKYO, Oct 26 (Reuters) - The Nikkei average is likely to come under pressure on Monday after U.S. industrial companies' weak results hurt Wall Street and on investor caution before Japanese earnings season heats up later in the week.

Toshiba Corp, Hitachi Ltd and Mitsubishi Heavy Industries may draw attention after the Nikkei business daily reported the firms are looking to develop small nuclear reactors for use by developing nations, among others.

"The market is likely to be soft, weighed down by a fall in U.S. stocks, rather than helped by a softer yen, as the market waits for earnings reports," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

"No specific sector is likely to drive trade, with commodity markets also being steady."

Steelmaker JFE Holdings Inc is among Japanese companies set to report earnings later in the day.

Nikkei futures traded in Chicago finished at 10,255.00 on Friday, down 0.3 percent from the Osaka close, pointing to a slightly lower start.

The benchmark Nikkei is likely to move between 10,100 and 10,350 on Monday, market players said. It edged up 0.2 percent on Friday to 10,282.99.

The Nikkei gained 0.2 percent on the week, with investors reluctant to actively take positions ahead of Japanese corporate earnings and a raft of economic indicators in Japan and the United States this week.

The dollar was trading around 92.10 yen in early Asia trade. Many Japanese exporters have set their currency rate assumptions at 90-95 yen for the year to March.

The S&P 500 Index dropped 1.2 percent on Friday. Shares of Burlington Northern Santa Fe Corp, the second-biggest U.S. railroad, slid after an RBC Capital analyst cut his price target on the stock. STOCKS TO WATCH

-- Japan Airlines

The Japanese government plans to put a state-backed turnaround body in charge of the overhaul of Japan Airlines (JAL), the Nikkei business daily said, underlining the government's deeper involvement in the process.

Separately, the Yomiuri newspaper reported the government has begun looking into special legislation to deal with the restructuring of struggling JAL.

The Yomiuri said the special legislation would force the airline to reduce pension payments and that reaching a solution on that issue, a major hurdle in discussions, could prompt creditors to take a more favourable stance towards the airline.

--Toyota Motor Corp

Toyota said on Friday it would merge its housing production and technology development operations with its home building unit.

-- Konica Minolta Holdings Inc

Konica Minolta Holdings said it plans to cut costs by 38 billion yen ($416 million) or more in the year to March, up from its original target of 33 billion yen, to shore up profitability.

Separately, the company cut its annual profit forecast by 24 percent on slow copier demand, casting a shadow over the performance of other office machine makers such as Canon and Ricoh.

--United Arrows

The fashion retailer said it is likely to report first-half operating profit 36 percent higher than its own previous estimate as cost-cutting efforts more than offset weaker-than-expected sales.

The company said it now expects to report a 1.6 billion yen operating profit for the six months ended in September, up from 1.2 billion yen in the earlier forecast.

--Daiwa Securities Group

Daiwa Securities, Japan's second-largest brokerage, said it would aim to start an Internet banking service in 2011.

The move comes about a month after Daiwa and lender Sumitomo Mitsui Financial Group agreed to end their investment banking joint venture.

- Kawasaki Heavy Industries Ltd

A Qingdao railcar maker with a technology licensing agreement with Kawasaki Heavy Industries received an order worth 45 billion yuan ($6.6 billion) to build high-speed railway cars to connect Beijing and Shanghai, the Nikkei business daily said.

Railway parts makers, such as Hitachi Ltd, Toyo Electric and Nabtesco Corp could also see more business in China, the paper said. ($1=6.828 Yuan) (Reporting by Aiko Hayashi; Editing by Chris Gallagher)

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