TOKYO, March 24 (Reuters) - Japan's Nikkei average is likely to climb on Tuesday, with bank shares such as MUFG seen higher, after details of a U.S. plan to rid the banking sector of bad assets sparked hopes for the stabilisation of the financial system.
U.S. stocks surged around 7 percent on Monday after the Obama administration detailed the plan to purge toxic assets from bank balance sheets, fuelling optimism about a revival in bank lending and driving double-digit gains in financial shares.
"We're seeing some improvement in the two main factors that had pushed down the market, namely, fears about the financial system and a further deterioration in the economy are receding," said Hiroichi Nishi, general manager at Nikko Cordial Securities.
"There are worries that the Nikkei is getting overheated but the shift in sentiment will likely bring about a broad-based rally."
Nikkei futures traded in Chicago closed at 8,480 on Monday, 300 points above the Osaka close, pointing to a higher opening.
Market participants expect the benchmark Nikkei to move between 8,300 and 8,550 on Tuesday. It jumped 3.4 percent the previous day to end at 8,215.53, its highest close since Jan. 29. STOCKS TO WATCH
-- Nippon Steel Corp
Nippon Steel has sealed a year-on-year discount of around 57 percent on coking coal contracts with BHP Billiton Mitsubishi Alliance (BMA) for the fiscal year 2009/10, a Nippon Steel official said on Monday.
-- Yamada Denki
Japan's biggest electronics retailer, Yamada Denki, redeemed $104 million worth of convertible bonds due in 2015 and signalled it was ready to redeem more to reduce its debt burden.
-- Mori Seiki Co Ltd
Gildemeister AG, the world's biggest maker of cutting machine tools, said it has forged an alliance with its closest rival, Mori Seiki, to help it weather the worldwide economic slump. (Reporting by Aiko Hayashi; Editing by Chris Gallagher)