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Nikkei set to drop on Wall St tumble, firm yen

Published 11/01/2009, 06:46 PM
Updated 11/01/2009, 06:51 PM

TOKYO, Nov 2 (Reuters) - The Nikkei average is likely to slide on Monday, hurt by a stronger yen and after Wall Street tumbled on weak consumer spending data and renewed worries about Citigroup's balance sheet.

Analysts also cited CIT Group's bankruptcy filing on Sunday as further negative news for the market. CIT is a U.S. lender to hundreds of thousands of small and medium-sized businesses.

Sony Corp and Panasonic Corp are likely to draw attention after signalling the worst may be over for the world's two largest consumer electronics makers as they raised their full year outlooks, helped by cost cuts.

"The market will likely lose ground across the board after a sell-off in U.S. stocks, though both U.S. and Japanese stocks have already been oversold in the short-term," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

"The strengthening of the yen is also going to weigh on the market...there are no new Japan-specific reasons to buy Japanese stocks."

Nikkei futures traded in Chicago finished at 9,740.00 on Friday, down 2.7 percent from the Osaka close, pointing to a sharply lower start.

The benchmark Nikkei is likely to move between 9,600 and 9,900 on Monday, market players said. It rose 1.5 percent on Friday to 10,034.74.

The yen rose to two-week highs against the dollar around 89.20 yen in early Asia trade. Investors fret about a stronger yen as it eats into exporters' profits when they are repatriated.

The S&P lost 2.8 percent on Friday as the fragility of the U.S. economic recovery was highlighted by economic reports that showed U.S. consumers cut spending in September and consumer sentiment turned gloomier this month.

Citigroup shares sank after accounting expert Robert Willens, an independent consultant, said the bank was likely to have a $10 billion fourth-quarter charge on its deferred tax assets.

Japan's corporate earnings season continues this week. Companies reporting later in the day include Suzuki Motors Corp and Daihatsu Motor Co.

STOCKS TO WATCH

-- Mitsui Chemicals Inc

Mitsui Chemicals and China Petroleum & Chemical Corp, or Sinopec, plan to invest a combined 60 billion yen ($669 million) to build two factories in Shanghai, the Nikkei business daily said on Monday.

They plan to manufacture high-performance materials for resins and synthetic rubber used in automobiles and consumer electronics, the Nikkei said.

-- Sanyo Electric Co

Sanyo has agreed with PSA Peugeot Citroen to supply nickel-metal hydride batteries for the French carmaker's diesel-electric hybrid cars, the Nikkei business daily said

Separately, the Nikkei newspaper said Panasonic Corp will launch its tender offer for shares of smaller rival Sanyo as early as Thursday, after the deal won approval from Chinese regulators.

-- Toshiba Corp

Toshiba, Japan's biggest chipmaker, said its semiconductor operations sprang back to a quarterly profit on cost cuts and more stable prices, and it said it aimed to lift its annual outlook.

-- Resona Holdings

Resona said on Friday it would raise 75 billion yen through a private placement of newly issued preferred shares.

The bank said the shares would be allocated to insurance companies and the cash raise would boost its capital adequacy ratio and secure funds to pay back public money.

-- Daiwa Securities Group

Daiwa Securities, Japan's second-largest brokerage, reported a second straight quarterly profit, helped by a rebound in the stock market and demand for investment trusts from retail investors.

-- All Nippon Airways Co

ANA said it expects an annual loss and announced 1,000 job cuts as Japan's No.2 airline struggles with a drop in passenger numbers amid the economic downturn.

ANA projected a net loss of 28 billion yen for the year to March instead of a previously projected profit of 3 billion yen. The latest forecast was bigger than a consensus of a 19.9 billion yen loss from 9 analysts polled by Thomson Reuters I/B/E/S.

-- Takefuji Corp and other consumer lenders

Japan will consider reversing its tightening of regulations on moneylenders to help self-employed business owners following the financial crisis, the Nikkei business daily said on Sunday.

The leaders will discuss the appropriateness of limiting unsecured loans to one-third of annual income, as well as whether the government should take steps to mitigate any adverse impact of tightened regulations, the paper said.

-- Japan Tobacco Inc

Japan's health minister said on Sunday the country's tobacco tax could be raised to levels seen in Europe, reiterating the ministry's proposal forwarded to the government as part of fiscal 2010 tax reforms, Kyodo news agency reported.

-- Nabtesco Corp

Precision machinery maker Nabtesco Corp plans to form two joint ventures in China in 2010 to tap the country's growing investment in public transport, Nabtesco director Ben Sakamoto told Reuters in an interview on Friday. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)

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