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Nikkei may edge up but seen capped around 10,300

Published 12/12/2010, 06:30 PM
Updated 12/12/2010, 06:36 PM
USD/JPY
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TOKYO, Dec 13 (Reuters) - Japan's Nikkei average is expected to rise a tad on Monday and move in a range of 10,150-10,300, while investors are likely to take in stride China's move to increase reserve requirements for banks for the third time in a month.

"The move was widely expected, and since U.S. stocks rose, Japanese stocks will probably price that in soon," said Masumi Yamamoto, a market analyst at Daiwa Securities Capital Markets.

She said Friday's gains in U.S. stocks may help the Nikkei in early trading, but profit-taking could kick in if the Nikkei nears 10,300 as some technical indicators still show signs of overheating in the Tokyo market.

The toraku or up-down ratio, which measures how much the market is overheated, is at 151. A market with a figure above 120 is considered overheated.

"Investors may chase the market higher in the long run but this week they may want to wait and see if the Nikkei comfortably stays above 10,300," Yamamoto said.

Nikkei futures in Chicago closed at 10,255, up from the Osaka close of 10,210.

Investors will likely carefully monitor Otsuka Holdings' listing this week on the Tokyo Stock Exchange on Dec. 15.

Market observers say there probably will not be much turbulence in the market as most fund managers have likely sold stocks to make room in their portfolios for Otuska shares.

"But some passive fund managers will need to add the stock to their portfolios later, so we may see some selling in a wide range of stocks," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities. ----------------------MARKET SNAPSHOT @ 2205 GMT ------------

LAST PCT CHG NET CHG S&P 500 1240.4 0.6% 7.400 USD/JPY 84.01 0.06% 0.050 10-YR US TSY YLD 3.3229 -- 0.000 SPOT GOLD 1383.15 0.00% 0.000 US CRUDE 87.79 -0.66% -0.580 DOW JONES 11410.32 0.35% 40.26 -------------------------------------------------------------> Wall St rises on upbeat data, S&P holds key level > Euro to drop as EU leaders meet; Fed meeting looms > Higher yields may be a near-term trend > Gold drops as China tightens, down 2 pct on week > Oil slips on China rate hike worry, gasoline slide

STOCKS TO WATCH:

-- Sony Corp

Sony expects cash flow to improve by 100 billion yen ($1.20 billion) this fiscal year due to overhauling materials procurement and production, Executive Deputy President Yutaka Nakagawa told the Nikkei business daily.

-- Honda Motor Co

Honda expects to raise its annual global automobile sales by 80 percent over the next decade and plans to aggressively sell low-priced automobiles in emerging markets, the Nikkei business daily reported.

-- Hitachi Ltd

Hitachi plans to boost its China sales to 1.4-1.5 trillion yen in fiscal 2012, up from less than 1 trillion yen in fiscal 2009, the Nikkei business daily reported. (Reporting by Ayai Tomisawa; Editing by Michael Watson)

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