TOKYO, Jan 13 (Reuters) - Japan's Nikkei share average is expected to gain on Thursday, after hitting an eight-month intraday high the day before, following gains in U.S. stocks and as a successful bond auction in Portugal eased fears about the euro zone's debt crisis.
Banks, which led Wednesday's advance, are likely to extend gains after financials supported U.S. shares. JPMorgan Chase & Co rose 2.5 percent after its chief executive said the bank could increase its dividend.
Resource stocks such as Inpex and Sumitomo Metal Mining Co are also expected to gain as oil trades at 27-month highs, inching towards $100 a barrel for the first time since 2008, and gold prices rose to a one-week high on Wednesday.
"Easing worries over the euro zone and stronger signs of global economic recovery will help lift the Nikkei today," said Hiroichi Nishi, general manager at Nikko Cordial Securities.
Analysts say the benchmark Nikkei may rise above the previous day's eight-month closing high of 10,576.51 and is expected to move in a range of 10,500-10,650.
It may test crucial resistance around 10,638, a level hit on May 13 last year, analysts said.
Nikkei futures traded in Chicago closed at 10,620, up 1 percent from 10,520 in Osaka.
"Yesterday's high volume also indicates that the Nikkei will go higher today. It has had a very strong start to the year, so we may also see some profit-taking, but the overall trend is for the index to go up," added Nishi.
A healthy bond auction in Portugal drove investors into riskier assets. Investors were hopeful euro-zone finance ministers would beef up the European Union's rescue fund.
Banks and property shares led the Nikkei's advance on Wednesday, as foreign funds continued adding underweight financial stocks to their portfolios and property shares were in favour due to the Bank of Japan's asset buying scheme.
STOCKS TO WATCH:
--Chuo Mitsui Trust Holdings <8309.T>, Sumitomo Trust & Banking Co <8403.T>
Sumitomo Mitsui Trust Holdings Inc, to be created in April by merging Chuo Mitsui Trust Holdings and Sumitomo Trust & Banking, is considering a dividend payout ratio of 30 percent, the Nikkei business daily reported on Thursday. [ID:nSGE70B6YR]
--Toyota Motor Corp <7203.T>
Toyota is planning to mass-produce lithium ion batteries for its plug-in hybrid vehicles from this autumn as Panasonic Corp <6752.T> and Hitachi Ltd <6501.T> get set to churn out similar products of their own, the Nikkei business daily reported on Thursday. (Reporting by Antoni Slodkowski; Editing by Chris Gallagher)