By Antoni Slodkowski
TOKYO, March 18 (Reuters) - Japan's Nikkei average is seen moving in and out of positive territory in volatile trade on Friday, with the focus on attempts to avoid a nuclear catastrophe and investors monitoring the outcome of a G7 finance ministers call aimed at reining in the yen's rise.
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ced to restore a power cable to a nuclear power plant damaged by last week's earthqauke and tsunami in the hope of restarting pumps desperately needed to pour cold water on overheating fuel rods and avert a release of radiation. ID:nL3E7EH2SM]
The yen edged off a record high against the dollar on Thursday ahead of the G7 conference call on fears officials may soon intervene to rein in the currency's rapid rise.
The dollar had hit a record low of 76.25 yen on trading platform EBS. Asian trading began after a break of the previous record low of 79.75 triggered a cascade of automatic "sell" orders. The dollar later bounced back to hover around 79 yen.
While investors said that in the short term efforts by the authorities to keep the yen's rise in check could calm the jittery markets, they said in the longer term it could be hard to prevent the yen's advance putting more pressure on exporters already battered by the earthquake and ongoing power cuts.
"The moves on the currency side are being closely monitored, but the real focus is still on the nuclear power plant," said Hiroichi Nishi, general manager at Nikko Cordial Securities.
"Unless the situation there stibilises markets will remain on edge."
The benchmark Nikkei average ended 1.4 percent lower on Thursday at 8,962.67 points , recovering from the intraday low of 8,639.56, but the yen dominated the session.
Some analaysts said investors may adjust their positions ahead of a three-day weekend in Japan and offload some positions, pushing the market lower.
But others disagreed, saying that after a week in which the market plunged they may buy back shares hoping situation will become clearer by Tuesday when markets are due to reopen.
The rebound in European and U.S. stocks after three days of selling and other market barometers will give support to the Nikkei.
The iShares MSCI Japan Index exchange traded fund, or EWJ , closed up 4.7 percent, while the Nikkei futures traded in Chicago closed up 4.2 percent at 8,890, just 40 points below the Osaka close.
Analaysts said the Nikkei is likely to move between 8,700 and 9,200 on Friday.
Japanese government bond prices are seen dipping following a rise in Wall Street shares and a fall in U.S. Treasuries, although concerns over Japan's Fukushima Daiichi nuclear power plant and possible escalation of violence in Libya are likely to prompt short-covering ahead of the long weekend.
The 10-year Japanese goverment bond futures <0#2JGB:> are expected to be supported at aroudn 139.30, compared to Thursday's close of 139.70. ----------------------MARKET SNAPSHOT @ 2307 GMT ------------ INSTRUMENT LAST PCT CHG NET CHG S&P 500 1273.72 1.34% 16.840 USD/JPY 79.21 0.27% 0.210 10-YR US TSY YLD 3.2571 -- 0.000 SPOT GOLD 1405.89 0.25% 3.490 US CRUDE 103.42 1.97% 2.000 DOW JONES 11774.59 1.39% 161.29 ------------------------------------------------------------- > Wall St rebounds but light volume a worry > Yen retreats from record peak; G7 talks loom > Prices ease, but buyers may return on caution > Gold rises on dollar drop, oil rally; volume weak > Oil rallies nearly 4 pct, focus back on Mideast (Reporting by Antoni Slodkowski; Editing by Michael Watson)