TOKYO, Oct 19 (Reuters) - Japan's Nikkei average is likely to rise on Tuesday, drawing support from stronger-than-expected results from Citigroup, but the continued strength of the yen is expected to keep gains in check.
The earnings season is set to heat up in Japan towards the end of this month, and media reports about upbeat earnings at home, such as those of JFE Holdings Inc, may also provide support, one analyst said.
"The market will likely be solid, bolstered by ample liquidity in the world and as Japanese stocks have lagged behind and, on charts, the Nikkei's 25-day moving average keeps climbing higher," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.
"Worries that poor sales of foreclosed houses would hurt banks' profits receded after Citigroup's earnings, spurring short-covering (in U.S. financial stocks)."
Nikkei futures traded in Chicago closed at 9,545, up 0.6 percent from the Osaka close.
The benchmark Nikkei is likely to move between 9,450 and 9,600, market players said. It ended almost flat on Monday at 9,498.49.
Among earnings-related media reports, the Nikkei business daily said JFE's pretax profit for the April-September first half is believed to have reached 100-110 billion yen, beating the company's 100 billion yen forecast. Domestic shipments to automakers and other manufacturers picked up steam, and exports to China and South Korea were brisk, the paper said.
In early Asia trade, the yen edged up to 81.18 against the dollar, holding near a 15-year high of 80.88 reached on the EBS platform last week.
U.S. stocks rose on Monday as Citigroup jumped after reporting its third straight quarterly profit, beating forecasts and boosting optimism that the banking sector is on track to recover even amid a tepid economic expansion.
The earnings season continues in the United States, with the largest U.S. bank, Bank of America, reporting earnings on Tuesday. Last week JPMorgan Chase and Co's profits beat estimates.
Apple Inc, which hit an all-time high during the regular session, disappointed investors after reporting gross margins and iPad shipments, while shares in IBM also fell after the closing bell.
International Business Machines Corp reported a higher-than-expected profit and raised its outlook for the full year, but the shares fell on sluggish sales of technology services.
Technical charts show the Nikkei has strong support at its 25-day moving average, now at 9,477, while its next upward targets are its recent peaks around 9,700, marked this month, and 9,800, hit in July.
Japanese stocks are among the worst performers in the world's major stock indexes this year. The Nikkei has shed about 10 percent so far, hurt by the strong yen, while the MSCI index of Asia Pacific stocks outside Japan has gained about 10 percent during the same period.
STOCKS TO WATCH
-- Fujifilm Holdings
Fujifilm likely swung to a roughly 85 billion yen ($1.1 billion) operating profit in the six months to September from an 8.6 billion yen loss a year earlier, thanks to strong demand for LCD panel components, digital cameras and office equipment, the Nikkei business daily reported.
-- Mitsubishi Heavy Industries
Mitsubishi Heavy Industries will likely report its first-half operating profit has more than doubled on the year to around 60 billion yen, thanks to brisk sales of automotive components and engines, the Nikkei business daily reported. ($1=81.26 Yen) (Reporting by Aiko Hayashi; Editing by Chris Gallagher)