By Hideyuki Sano
TOKYO, March 21 (Reuters) - Japanese stocks are likely to stabilise after a 10 percent drop last week, buoyed by a rare joint intervention in the currency markets by the Group of Seven (G7) that helped to stem a yen surge and by reports of progress in efforts to contain radiation leaks at a quake-stricken nuclear power plant.
Long-end Japanese government bonds may come under pressure as domestic investors are seen ready to take advantage of any rise in prices to lock in profits ahead of book-closings at the end of March.
The yen backed off from a record high of 76.25 per dollar hit last week, after the G7 last week conducted its first coordinated intervention since 2000. The Japanese currency was trading around 81 to the dollar on Monday.
Exporters' shares may benefit if the yen eases further, with many traders keen to see whether the Bank of Japan and its G7 partners will continue to intervene this week.
Worries about a catastrophic meltdown at the Fukushima Daiichi nuclear power plant are also gradually easing as power cables reached all six reactors in the plant by Monday, although safety concerns could linger for months and anxiety is heightening over radiation in food supplies.
Traders may also draw some encouragement from billionaire investor Warren Buffett's comments on Monday that Japan's earthquake was the kind of extraordinary event that creates a buying opportunity.
Still, with the earthquake and tsunami expected to cost the economy $250 billion , the Nikkei share average is seen facing an uphill battle to recover from last week's fall.
The Nikkei is seen trading between 8,500 and 9,500 during the week, versus Friday's close at 9,200.
In the bond market, worries about the cost of reconstruction could hurt long maturities. Investors have been cashing out of positions to make up for losses in stocks ahead of book-closings on March 31.
"There's speculation about an extra budget for rebuilding and delays in tax reforms. The yield curve is likely to steepen in the medium term," said Shinji Nomura, chief fixed income strategist at Nikko Cordial Securities.
There may be solid demand from investors with abundant cash, however, especially after a large amount of government bonds matures on Tuesday.
The 10-year Japanese government bond yield is expected to move in a range from 1.190 to 1.260 percent during the week, compared with Friday's settlement of 1.210 percent.($1 = 80.610 Japanese Yen) (Editing by Edmund Klamann)