TOKYO, Dec 1 (Reuters) - Japan's Nikkei average is likely to slip on Wednesday, falling further from a recent five-month high, after the euro weakened against the yen on concerns Europe's credit crisis will spread despite last weekend's bailout of Ireland.
The euro zone's troubles showed no sign of abating after Standard and Poor's put Portugal's A-minus credit ratings on review for a possible downgrade on Tuesday, citing uncertainties related to a potential financial rescue by the EU and the IMF.
"We are really worried about the euro/yen rate. At 110 yen per euro it was already impacting the market yesterday, but now it's at 108.6 yen and is likely to bring the market lower," said Kenichi Hirano, operating officer at Tachibana Securities.
"The Nikkei could have recovered to over 10,000 yen today, but now that's unlikely, as investors will be cautious about the euro zone problems," he said.
The Nikkei average is expected to move in a range of 9,750 to 9,950, traders said.
It fell almost 2 percent to 9,937.04 on Tuesday, after hitting a five-month closing high of 10,125.99 the previous day, as a tumble in Chinese shares prompted Japanese investors to book profits after a sharp rally in November.
U.S. stocks fell in a choppy session but showed resilience in the face of Europe's debt crisis, recovering some of their losses on more encouraging signs from the U.S. economy.
Consumer discretionary stocks were among the better performers on Wall Street after the Conference Board reported U.S. consumer confidence rose to its highest level in five months.
Nikkei futures in Chicago closed at 9,945, 0.1 percent below the Osaka close.
Japanese stocks broke through the psychologically sensitive support line at 10,000 and immediate support lies at the closely watched 200-day moving average, now at 9,911.41.
The Nikkei rallied 8 percent in November, its best monthly performance since March, with foreigners shifting funds back to lagging Tokyo equities after U.S. monetary easing lifted expectations of more liquidity in financial markets. ----------------------MARKET SNAPSHOT @ 2152 GMT ------------
INSTRUMENT LAST PCT CHG NET CHG S&P 500 1180.55 -0.61% -7.210 USD/JPY 83.63 -0.02% -0.020 10-YR US TSY YLD 2.7968 -- -0.029 SPOT GOLD 1385.35 0.03% 0.410 US CRUDE 83.65 -2.43% -2.080 DOW JONES 11006.02 -0.42% -46.47 ------------------------------------------------------------- > Wall St slips on euro zone but US data helps > Euro falls vs dlr; S&P puts Portugal on credit watch > Bonds on track for worst month in nearly a year > Gold rises over 1 pct on euro zone debt worries > U.S. crude oil off slightly after API stock draw
STOCKS TO WATCH
--Toyota Motor Corp
Toyota, the world's largest carmaker, plans to begin assembling plug-in hybrids in China by 2012, when it kicks off domestic production of the vehicles, the Nikkei business daily reported.
--Sony Corp
Sony, with more cash coming in this fiscal year, will reduce its group interest-bearing liabilities for the first time in three years, the Nikkei business daily said.
The firm will slash debt by about 10 percent to 1.01 trillion yen ($12.01 billion) in the year ending March 31, the paper said.
--Honda Motor Co
Honda unveiled a new strategic small car specifically for Asian markets to meet demand from Asia's middle class, the Nikkei business daily reported.
--MS&AD Insurance
Mitsui Sumitomo Insurance, a unit of MS&AD, is considering spending tens of billions of yen in the United Kingdom within two years to acquire an insurer, President Yasuyoshi Karasawa told the Nikkei business daily. (Reporting by Antoni Slodkowski; Editing by Chris Gallagher)