By Ayai Tomisawa
TOKYO, April 18 (Reuters) - Japan's Nikkei edged lower but held to a narrow range on Monday as a drop in telecommunications stocks after a rating cut by Goldman Sachs offset gains by oil shares boosted by higher crude prices.
Analysts said U.S. corporate earnings announcements from Intel Corp and others, as well as news related to Japanese manufacturers' earnings starting late this month, would likely set the tone in the market this week.
Tokyo stocks have recouped around two-thirds of the losses incurred after the devastating March 11 earthquake. But trade has turned more volatile and thinned out ahead of earnings reports that may pose more questions than they answer, as many firms will likely not give forecasts for this business year.
"We already know that last fiscal year's results were not good. The market is likely to be sensitive to announcements related to this fiscal year," said Yutaka Miura, a senior technical analyst at Mizuho Securities.
On Monday, oil shares outperformed the market after oil prices gained, with Brent crude surging past $123 a barrel as improving U.S. consumer confidence and industrial production eased concerns over the impact on demand of climbing fuel costs. [ID:nL3E7FF0HH]
Inpex rose 0.8 percent to 602,000 yen and JX Holdings <5020.T) gained 0.6 percent to 523 yen.
However, Softbank Corp fell 2.2 percent to 3,285 yen, on the second biggest turnover on the Tokyo stock exchange's main board, after Goldman Sachs cut its rating to "sell" from "neutral", saying that heavy capital investment was pushing down profitability.
NTT Corp was down 0.8 percent at 3,705 yen after the brokerage reduced its rating to "neutral" from "buy".
Goldman Sachs said in a report to clients that the company may not be able to calculate the impact from the March earthquake in time to release this fiscal year's earnings estimate when it announces last fiscal year's earnings in a few weeks.
The benchmark Nikkei average fell 0.2 percent, or 17.24 points, to 9,574.28 after trading above 9,600 earlier in the session. The broader Topix dropped 0.2 percent to 839.52.
"A sharp drop is not expected today as there are hopes that the Bank Of Japan will buy ETF securities when the Nikkei nears 9,500," said Hiroichi Nishi, general manager at SMBC Nikko Securities.
Analysts said the Nikkei may trade between 9,500 and 9,750 on Monday.
Tokyo Electric Power Co gained 0.9 percent to 473 yen after the company said on Sunday it hoped to achieve a "cold shutdown" of its crippled Fukushima Daiichi nuclear plant in six to nine months, setting a timeframe for bringing the prolonged crisis under control. [ID:nL3E7FH03J]
Shares in KDDI Corp fell 2 percent to 491,500 yen after the Nikkei business daily said TEPCO planned to sell its shares in the firm to help pay for costs stemming from the crisis at the Fukushima plant.
Asia's largest utility holds about 360,000 shares in KDDI, or an 8 percent stake, which are worth about 180 billion yen ($2.17 billion) at current market prices, the daily said. [ID:nL3E7FH002] (Additional reporting by Antoni Slodkowski)