TOKYO, Nov 30 (Reuters) - Japan's Nikkei average is likely to to take a breather on Tuesday after hitting a five-month closing high the previous day, but a softer yen against the dollar is expected to lend support.
The market may also be weighed down after concerns that Europe's credit crisis will spread despite a weekend bailout of Ireland sent Wall Street lower on Monday, boosted U.S. 30-year Treasury bonds and spurred safe-haven buying of gold.
The yen was trading at 84.25 per dollar in early Asia trade, near a two-month low hit on Monday, as investors continued to sell euros and buy dollars.
"It looks like the Nikkei will keep above the 10,000 level today and could gain on the weaker yen and window dressing," said Kazuhiro Takahashi, general manager at Daiwa Capital Markets, adding that high expectations for the year-end shopping season in the United States may also provide support.
"The possibility that the euro zone's debt problems will spread to Spain and Portugal very soon is rather low and I don't think we're going to see anything like last time during the problems with Greece."
Nikkei futures in Chicago closed at 10,095, 0.2 percent below the Osaka close.
The Nikkei average is expected to move in a range of 10,000 to 10,200, traders said. It rose 0.9 percent on Monday to 10,125.99, its highest finish since June 21.
The weaker yen is likely to bolster shares of exporters, helping the market maintain a positive tone that has fuelled a rally of more than 10 percent this month.
Many exporters have set their earning targets based on exchange rates of around 80-82 yen per dollar. Investors expect that if the yen remains softer for some time, companies may raise their earnings forecasts, which would lend further support to the Nikkei.
STOCKS TO WATCH
-- Mazda Motor Corp, Sumitomo Corp
Mazda and Sumitomo will jointly spend 30 to 40 billion yen ($355 million-$475 million) to build a car plant in Mexico, which will supply compact cars to Latin America, the Nikkei business daily reported on Tuesday.
-- Toyota Motor Corp
Toyota will pay to fix about 378,000 Prius models in the United States for a coolant pump glitch that could cause the top-selling hybrid to overheat and lose power, the automaker said on Monday.
-- Nomura Holdings
Nomura will not be designated a systemically important financial institution under new global regulations, the chief executive of Japan's largest broker said on Monday, according to a company spokesman.
-- Inpex Corp
Japanese oil developer Inpex said on Monday one of its wholly owned subsidiaries had not agreed to a move by Ecuador to turn an exploration contract for the the nation's onshore Block 18 into a service contract. (Reporting by Antoni Slodkowski; Editing by Chris Gallagher)