TOKYO, Dec 24 (Reuters) - Japan's Nikkei average is expected to edge lower on Friday, pushed down by a stronger yen against both the dollar and euro in slow trade ahead of holidays.
But underlying strong sentiment, which helped lift the Nikkei to its highest level since May 14 on Wednesday, reflecting general bullishness in global equities markets and a positive outlook for 2011, could provide support.
Nikkei futures in Chicago closed at 10,320, down 0.1 percent from the Osaka close of 10,330.
"Global markets are going into holiday mode, so we're unlikely to see any major moves in Tokyo today," said Hiroichi Nishi, general manager at Nikko Cordial Securities.
"The upside will likely be limited by the stronger yen against the dollar, an unstable political situation and a general lack of direction shown by other global stock markets," Nishi said.
A rift within Japan's ruling Democratic Party (DPJ) over scandal-plagued powerbroker Ichiro Ozawa is distracting the government from tackling tough policy decisions and complicating prospects for passing laws.
The benchmark Nikkei will likely trade between 10,250 and 10,350, analysts said, after reaching a seven-month intraday high on Wednesday, when it closed at 10,346.48. Tokyo markets were closed for a holiday on Thursday.
Market players said losses will also likely be limited in the wake of broadly positive U.S. economic data.
U.S. consumer sentiment rose in December to its highest level since June, and demand for long-lasting manufactured goods surged. First-time claims for jobless benefits edged down, but a rise in new home sales in November was below expectations.
Resource-related shares, including those of trading houses, are expected to gain support after crude oil surged above $91 a barrel to its highest price in more than two years on Thursday. ----------------------MARKET SNAPSHOT @ 2211 GMT ------------
LAST PCT CHG NET CHG S&P 500 1256.77 -0.16% -2.070 USD/JPY 82.92 -0.04% -0.030 10-YR US TSY YLD 3.397 -- 0.049 SPOT GOLD 1379.1 -0.06% -0.790 US CRUDE 91.54 1.17% 1.060 DOW JONES 11573.49 0.12% 14.00 ------------------------------------------------------------- > Wall St marks 4th week of gains; S&P slips > Euro edges higher vs US dollar; Swiss franc tumbles > Prices cut before next week's supply > Gold slips as U.S. data buoys dollar versus euro > Oil jumps to highest since 2008 crisis, $100 eyed
STOCKS TO WATCH
-- Toshiba Corp
Toshiba will outsource fabrication of system chips to South Korea's Samsung Electronics Co, freeing up resources for its memory chip operations, the Nikkei business daily reported on Friday.
-- Sanyo Electric Co
Sanyo plans to raise its annual output capacity for automotive lithium-ion batteries by 150 percent, by investing about 15 billion yen ($180 million) in a key plant, the Nikkei reported on Thursday.
-- Toyota Motor Corp
Toyota has agreed to pay $10 million to settle legal claims from the family of a California state trooper and three relatives whose fatal car wreck helped spark the automaker's wide-ranging safety recall, lawyers said on Thursday.
-- Sony Corp
Sony is in talks to buy a Japanese microchip production line from Toshiba for an estimated 50 billion yen to boost its output of chips for cameras and mobile phones, an industry source said on Thursday.
-- Mitsui & Co
Mitsui said on Wednesday it planned to spend 100 billion yen to help increase shipments of iron ore produced by a joint venture with Rio Tinto.
-- Tokyo Gas Co
Tokyo Gas, Japan's top city gas distributor, said on Wednesday it has reached a basic agreement to sell liquefied natural gas (LNG) to Hokkaido Gas for 11 years starting in the 2012/13 business year. ($1=82.96 Yen) (Reporting by Antoni Slodkowski; Editing by Michael Watson)