TOKYO, Aug 30 (Reuters) - Japan's Nikkei is set to rise on Monday after revised second quarter U.S. GDP was less gloomy than expected, and as the yen slipped after the Bank of Japan said it would hold an emergency policy meeting at 0000 GMT.
Expectations that steps by Japanese authorities aimed at steming strength in the yen will likely lead to short-covering in stocks, though gains could lose steam once news comes out, market players said.
"Stocks will likely gain after a jump in U.S. stocks on the downward revisions to the GDP were not as big as expected, and helped by expectations, which have emerged since last week, of measures from Japan against the strong yen," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.
"But we need to brace for the possibility that this policy news will have run its course after the result of the BOJ meeting is announced. A lot will still depend on the outlook for the U.S. economy."
BOJ Governor Masaaki Shirakawa will hold a news conference at 2:30 p.m. (0530 GMT) after the meeting.
The BOJ is widely expected to loosen monetary policy by expanding its cheap fixed-rate loan programme for banks, which was put in place in December last year and expanded once in March.
Nikkei futures traded in Chicago closed at 9,080 on Friday, up 1.2 percent from the Osaka close.
The benchmark Nikkei is likely to move between 9,000 and 9,200, market players said.
It rose 1 percent on Friday to 8,991.06, moving further away from a 16-month low hit earlier in the week, buoyed after investors unloaded superlong Japanese debt to buy stocks as well as by hopes for Japanese moves to rein in the strong yen.
But the index finished the week down 2 percent, its third negative week in a row and the worst such run since April, hit by fears the strong yen would dampen the country's economic recovery and growing worries about a double-dip in the U.S. economy.
One key target for the Nikkei awaits at 8,697, a 61.8 percent retracement of the rally between its March 2009 low and April 2010 high.
U.S. stocks gained 1.7 percent on Friday as strong buying interest at a key technical level and short-covering sparked the market's comeback.
Gross domestic product growth, the measure of total goods and services output within U.S. borders, was revised down to only 1.6 percent, from 2.4 percent. Many economists had forecast an even bigger downward revision to only 1.4 pct growth.
Bernanke also told central bankers at a conference in Jackson Hole, Wyoming the recovery has weakened more than expected but the U.S. central bank was ready to take further steps if needed to spur the recovery.
STOCKS TO WATCH
-- Sojitz Corp
Trading house Sojitz will take part in the Chinese government's project to develop a large industrial park in Hebei Province, the Nikkei business daily reported.
-- Advantest Corp, other high-tech shares
Intel Corp warned that third-quarter revenue could fall short of its own estimates by more than $1 billion, reinforcing doubts about the strength of a technology sector recovery. (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)