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Nikkei seen higher after holiday, yen eyed

Published 10/11/2010, 07:32 PM
Updated 10/11/2010, 07:36 PM

TOKYO, Oct 12 (Reuters) - Japan's Nikkei average is likely to open higher on Tuesday after world stocks inched up as investors bet on further asset buying by the U.S. Federal Reserve, but strength in the yen may dampen further gains.

Japanese markets were shut on Monday for a national holiday, after falling 1 percent on Friday. The closely watched U.S. jobs report released on Friday was surprisingly weak and strengthened the case for more stimulus from the Fed.

Sentiment toward the dollar also remained broadly bearish as the Fed looked set to pump more cash into the economy after a weekend meeting of finance leaders produced no quick fix for tensions in currency markets.

"The market will likely be range-bound. The G7 meeting had little impact on markets, though the worse-than-expected September jobs data has heightened expectations toward additional easing," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

"With dollar/yen having gone below 82 yen, the market is also watching if there will be currency intervention."

The benchmark Nikkei is likely to move between 9,500 and 9,700, market players said.

The index ended Friday at 9,588.88, but gained 2 percent on the week, its best weekly performance since mid-September, as investor confidence improved after the BOJ on Tuesday cut interest rates to virtually zero and pledged to pump more funds into the struggling economy.

The Nikkei's next upward targets are seen near its recent peaks around 9,700 hit this month and 9,800 hit in July.

Market players see the Nikkei's 25-day moving average of 9,411 and the 75-day average of 9,399 as major technical support levels.

On Monday, U.S. stocks drifted in the lightest trading volume of the year as few dared to place bets ahead of key companies' results later this week, including Intel Corp, JPMorgan Chase & Co and General Electric Co.

Friday's data showed the economy shed jobs in September for a fourth straight month as government payrolls fell and private hiring slowed.

The dollar tumbled to a 15-year low against the yen as investors concluded that Friday's weak jobs data meant the U.S. central bank at its Nov. 2-3 meeting was almost certain to pump hundreds of billions of new dollars into the economy.

In early Asia trade, the dollar traded at 82.13 yen after hitting a 15-year low of 81.37 on Monday.

STOCKS TO WATCH

-- Fast Retailing

Fast Retailing, which wants to be the world's No. 1 clothing retailer within 10 years, said on Friday its profit will slip this business year for the first time in four years as global competition tightens and weak consumer spending hurts income at home.

-- Oki Electric

Telecoms equipment maker Oki Electric Industry said on Friday it would issue 30 billion yen ($365.6 million) in preferred shares to bolster its battered finances.

The firm revised down its full-year earnings forecast ending in March on Friday to a net loss of 28 billion yen from a profit of 4.5 billion yen due to additional restructuring efforts such as a workforce cut.

-- Shin-Etsu Chemical

Shin-Etsu Chemical plans to extract rare earth metals from discarded air conditioners and recycle them in magnets starting next year, the Nikkei business reported on Saturday. (Reporting by Aiko Hayashi; Editing by Joseph Radford)

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