TOKYO, May 6 (Reuters) - Japan's Nikkei average is set to fall on Friday after Wall Street was hit by a massive sell-off in commodities as a surge in weekly claims for jobless benefits intensified worries over a faltering economic recovery.
Japanese stocks rallied on Monday, right before a 3-day holiday, with the Nikkei closing above the closely watched 10,000 mark for the first time since the March 11 earthquake on optimism that Wall Street shares would rally after U.S. officials said al Qaeda leader Osama bin Laden had been killed.
"Such hopes were betrayed by poor U.S. jobless claims and the strong yen while we were on holiday," said Kenichi Hirano, a strategist at Tachibana Securities. "Investors will likely sell on disappointment as they had bought on such optimism on Monday, though the Nikkei may be supported above 9,700."
The dollar fell below 80 yen for the first time since March 18, the day central banks intervened to weaken the Japanese currency after it hit a record high. The pair fell to a 7-week low of 79.57 yen Thursday, before trading at 80.35 early on Friday morning.
Analysts said commodity stocks may underperform, as both gold and oil prices fell on Thursday.
Pointing to a lower opening, Nikkei futures in Chicago
<2NKc1> ended at 9,765 on Thursday. On Monday, Nikkei futures
closed in Osaka
The benchmark Nikkei closed on Monday up 1.6 percent or 154.46 points at 10,004.20, after reaching a post-quake intraday high of 10,017.47. The broader Topix also rose 1.6 percent, or 13.70 points, to 865.55.
Analysts said the Nikkei is expected to trade in a 9,700-9,850 range on Friday, while immediate support is seen at its 5-day moving average of 9,755. ----------------------MARKET SNAPSHOT @ 2304 GMT ------------
INSTRUMENT LAST PCT CHG NET CHG
S&P 500 1335.1 -0.91% -12.220
USD/JPY 80.35 0.14% 0.110
10-YR US TSY YLD 3.1535 -- 0.000
SPOT GOLD 1473.4 0.12% 1.700
US CRUDE
> Commodities rout forces Wall St retreat > US dollar soars as euro and commodities slump > Bonds gain on economic worries, falling commodities > Silver dives for 5th day, biggest loss since 1980 > Oil crashes 10 pct in record rout
STOCKS TO WATCH
-- Japan Tobacco
Japan Tobacco said on Friday it has decided to close a factory in Austria and has started talks with a local union.
-- IHI Corp
IHI plans to begin production as early as spring 2012 of large storage tanks used to develop offshore liquefied natural gas, building the first dedicated assembly line in Japan at its Aichi Prefecture plant, the Nikkei business daily said.
-- Kobe Steel , Toyota Motor
Kobe Steel Ltd and Toyota Motor Corp have developed a molding process for high-tensile steel sheet that paves the way for lighter autoparts, the Nikkei business daily said. (Reporting by Ayai Tomisawa; Editing by Michael Watson)