TOKYO, Jan 24 (Reuters) -Japan's Nikkei average is expected to open higher on Monday, with investors likely to buy back exporters that have fallen recently, on the back of a slightly weakening yen against the euro.
But many market participants are expected to wait on the sidelines on Monday ahead of Japanese corporate earnings this week for the October-December period.
"Sentiment is pretty good for corporate earnings, but people are still wary about external factors such as tightening worries in China," said Yutaka Miura, a senior technical analyst at Mizuho Securities. "The Nikkei may stay in a narrow range."
Euro-sensitive stocks such as Canon Inc (7751.T> and Olympus Corp may be bought on short-covering, analysts said.
The Nikkei 225 stock average is expected to move in a range of 10,250-10,350 after ending down 1.6 percent at 10,274.52 on Friday, its biggest daily fall in two months.
"Overheating in the market is being corrected," said Hiroichi Nishi, general manager at Nikko Cordial Securities, adding that the toraku ratio, or up-down ratio, for the first section of the Tokyo Stock Exchange, was at 110 as of Friday, down from the 120 level that signals an overheated market. The ratio is calculated by dividing the 25-day moving average of stocks that gained by the 25-day average of those that fell.
Nikkei futures traded in Chicago closed at 10,320, compared with 10,305 in Osaka.
The broader Topix dropped 1.8 percent on Friday.
STOCKS TO WATCH
--Kirin Holdings Co
Japan's Kirin Holdings and China Resources (Holdings), the parent of China Resources Enterprise, will establish a joint venture in China as early as later this year, the Nikkei business daily reported on Monday.
China Resources subsidiary China Resources Snow Breweries Ltd., or CR Snow, holds a roughly 20% share of the Chinese beer market, eclipsing second-ranked Tsingtao Brewery Co, the Nikkei said.
--Takeda Pharmaceutical Co.
Takeda and Astellas Pharma Inc. (4503.T> are among the major drugmakers kicking off production of antibody drugs for cancer and other diseases, the Nikkei business daily said.
--Sony Corp
Sony will make a new version of its PlayStation Portable handheld game system compatible with NTT DoCoMo Inc's cellular phone network, the Nikkei business daily said.
With smartphones increasingly encroaching on the market for video game machines, Sony is stepping up efforts to develop products that combine the features of both smartphones and gaming devices, the Nikkei reported. (Reporting by Ayai Tomisawa; Editing by Joseph Radford)