TOKYO, Nov 22 (Reuters) - Japan's Nikkei average is expected to test a fresh five-month high on Monday helped by the yen's recent slip against the dollar, although some profit-taking is seen likely to emerge after its 8.9 percent rally this month.
Market players said China's decision on Friday to raise banks' reserve requirements was unlikely to jolt Tokyo shares, as investors had been bracing for such monetary tightening by China for some time.
"Market players are pinning hopes on excessive liquidity and the yen is now moving at weaker levels than companies' exchange rate assumptions, so there are hopes that earnings, especially for exporters, may be upgraded," said Hiroichi Nishi, general manager at Nikko Cordial Securities.
Another point to watch is whether recent buying of Japanese shares by overseas investors will continue, Nishi said.
Active short-covering of banks and other financials by overseas fund operators helped give a lift last week to the Nikkei, which has climbed 8.9 percent so far in November.
Nikkei futures in Chicago closed at 10,105.00, up 0.5 percent from their Osaka close of 10,050.
The Nikkei is likely to trade between 10,000 to 10,150 on Monday, market players said.
It rose around 0.1 percent to a five-month closing high of 10,022.39 on Friday.
Technicals have brightened after the Nikkei rose above resistance at the 200-day moving average last week for the first time since May. The next upside target is its June high of 10,251.90. After that a 61.8 percent retracement of its April to September sell-off lies at 10,410.49.
China ordered lenders on Friday to lock up more of their money at the central bank for the second time in two weeks, stepping up its battle to pull excess cash out of the economy before inflation has a chance to take off.
The People's Bank of China said that it would increase banks' required reserves by 50 basis points, its fifth such announcement this year. ----------------------MARKET SNAPSHOT @ 2212 GMT ------------
LAST PCT CHG NET CHG S&P 500 1199.73 0.25% 3.040 USD/JPY 83.49 0.02% 0.020 10-YR US TSY YLD 2.8769 -- 0.000 SPOT GOLD 1354.15 0.00% 0.000 US CRUDE 81.98 -0.53% -0.440 DOW JONES 11203.55 0.20% 22.32 ------------------------------------------------------------- > Chip shares rise, market ends flat for week > Euro likely to hold gains vs dollar in busy week > Bonds steady to higher before supply next week > Gold steadies on Irish aid hopes; China in focus > Oil slips on China bank reserve move
STOCKS TO WATCH
-- Hitachi
Britain will replace its ageing intercity express trains at a cost of 7.5 billion pounds ($11.98 billion) a newspaper report said on Sunday. A consortium consisting of Japanese industrial conglomerate Hitachi and British infrastructure project manager John Laing are the preferred bidders on the contract, the Sunday Times said.
-- Nippon Telegraph and Telephone Corp
The Japanese government plans to sell a roughly 3 percent stake in Nippon Telegraph and Telephone Corp, netting about $2.2 billion for state coffers, the Nikkei business daily reported on Sunday.
NTT plans to buy the shares from the government through an off-floor exchange platform, preventing the stock from being released on to the market, the Nikkei said.
-- Nissan
Nissan plans to buy 10 percent of Russia's top carmaker AvtoVAZ next year as part of a bid with partner Renault to secure 50 percent, a Russian state firm said on Friday. ($1=.6258 Pound) (Reporting by Masayuki Kitano; Editing by Michael Watson)