TOKYO, Jan 27 (Reuters) - Japan's Nikkei average is expected to advance on Thursday after U.S. shares posted solid gains the previous day, but the market is seen lacking energy to rise strongly ahead of the peak of the corporate earnings session.
Concerns over inflation in emerging economies, with wariness over a possible credit tightening in China, and recent firmness in the yen against the dollar are making investors nervous about piling up large buy positions, analysts said.
"Convincing gains in New York shares overnight should give Japanese stocks support today, but investors will be careful about buying too actively in the midst of the earnings season," said Kazuhiro Takahashi, general manager at Daiwa Capital Markets.
"The market is also concerned about a possible further monetary tightening by China and other emerging countries following India's rate rise," Takahashi said.
Canon, NEC and Nintendo are among companies announcing earnings after the market closes.
On Wednesday, the S&P 500 closed at a 29-month high led by gains in tech and commodity shares, as investors largely ignored the Federal Reserve's lukewarm economic assessment.
The stock market showed little reaction to the Fed, which said high unemployment still justifies a $600 billion bond-buying programme that has helped equities rally in the last few months.
Nikkei futures in Chicago closed at 10,455, up 0.3 percent from the close in Osaka of 10,420.
The benchmark Nikkei is expected to move between 10,350 and 10,500 after it slipping 0.6 percent the previous day.
The market is watching whether the Nikkei can break through its 25-day moving average, now at 10,408. A decisive rise beyond that level could pave the way for it rise toward the eight-month intraday high of 10,620.57 reached on Jan. 13, analysts said. ----------------------MARKET SNAPSHOT @ 2259 GMT ------------
LAST PCT CHG NET CHG S&P 500 1296.63 0.42% 5.450 USD/JPY 82.23 0.05% 0.040 10-YR US TSY YLD 3.4205 -- 0.090 SPOT GOLD 1342.99 -0.25% -3.370 US CRUDE 87.33 0.00% 1.140 DOW JONES 11985.44 0.07% 8.25 ------------------------------------------------------------- > S&P closes at 29-month high; techs, commods lead > Dollar edges lower as Fed gives cautious outlook > Bonds sag on view Fed is too gloomy on economy > Gold rises after Fed as ETFs shed bullion > U.S. oil gains as equities up, Fed supports
STOCKS TO WATCH:
-- Mitsubishi Heavy Industries Ltd.
Japanese engineering conglomerate Mitsubishi Heavy is seen posting an annual group operating profit of about 90 billion yen ($1.10 billion), up 35 percent from a previous outlook, business daily Nikkei said.
-- Japanese steelmakers
Japan's four largest steelmakers plan to double combined overseas output capacity for high-quality automotive steel to 13 million tonnes by 2013, the Nikkei reported.
Nippon Steel Corp, JFE Holdings Inc unit JFE Steel Corp, Sumitomo Metal Industries and Kobe Steel intend to spend up to 400 billion yen to expand facilities, the business daily said.
-- Gree Inc
Japanese mobile social gaming firm Gree Inc said on Wednesday it would tie up with China's Tencent Holdings, giving it access to a market where 120 million people already play mobile games.
-- Toyota Motor Corp
Toyota Motor said it would recall more than 1.7 million vehicles worldwide, bringing its total recalls to nearly 16 million since late 2009 and dealing a blow to its efforts to restore its reputation for quality. ($1=82.18 Yen) (Reporting by Chikafumi Hodo; Editing by Michael Watson)