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Nikkei set to gain but banks seen under pressure

Published 09/09/2010, 07:23 PM
Updated 09/09/2010, 07:28 PM
USD/JPY
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TOKYO, Sept 10 (Reuters) - Japan's Nikkei average is expected to gain on Friday after stronger-than-expected U.S. data on jobless benefits and trade raised hopes the tepid economic recovery would accelerate.

Nikkei futures traded in Chicago closed at 9,150, up 1.3 percent from the Osaka close.

But market players said banking stocks may come under pressure following a newspaper report about the possible bankruptcy filing of a domestic bank and Deutsche Bank's weighing a share sale of up to $11.4 billion.

"The market will likely draw support from gains in U.S. stocks and calming moves in the currency market for now," said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

Incubator Bank of Japan will tell the Financial Services Agency on Friday that its earnings report for the half year to September will likely show a negative net worth of 150 billion yen ($1.79 billion), which is expected to prompt the FSA to declare it bankrupt, the Nikkei business daily reported.

The bank's depositors are expected to be refunded only up to 10 million yen in principal plus earned interest, marking the first time that a cap on deposit insurance has been applied in Japan, the paper said.

"Although its impact on the overall market is likely to be limited, the news about a payoff will likely alarm investors about the financial sector, coupled with Deutsche Bank's financing news," Takahashi said.

The benchmark Nikkei is likely to move between 8,900 and 9,200, market players said. It rose 0.8 percent on Thursday to 9,098.39, pulling away from a 16-month low of 8,796.45 hit on Sept. 1.

U.S. stocks edged up after new U.S. claims for unemployment insurance fell more than expected last week to their lowest level in two months.

The U.S. trade deficit narrowed more than forecast in July as exports shot to the highest level since August 2008, painting a rosier picture for economic growth.

On Friday, investors in Tokyo are closely watching the settlement price of Nikkei futures and options contracts expiring in September.

Initial estimates by local brokerages are expected slightly after the market opening and the official settlement price will be announced by the Osaka Securities Exchange after the bell.

The Nikkei average inched up on Thursday, lifted by short-covering, but resistance loomed on technical charts, casting doubt over further gains in the Nikkei.

The strength of the yen, which remains within sight of a 15-year high versus the dollar, is also likely to put a lid on further gains, market analysts say, keeping its weekly performance almost flat.

In early Asia trade, the dollar traded at 83.99 yen, within sight of the 15-year low of 83.34 yen hit this week. ----------------------MARKET SNAPSHOT @ 2310 GMT ------------

LAST PCT CHG NET CHG S&P 500 1104.18 0.48% 5.310 USD/JPY 83.98 0.19% 0.160 10-YR US TSY YLD 2.757 -- 0.000 SPOT GOLD 1244.55 -0.30% -3.720 US CRUDE 74.91 0.89% 0.660 DOW JONES 10415.24 0.27% 28.23 ------------------------------------------------------------- > Wall St buoyed by upbeat economic data > Yen hovers near 15-year peak vs dollar; euro falls > Bonds take a hit from perky data, poor auction > Gold ends near 1-week low, safe-haven bids unwound > US oil gains, Brent spread narrows on Enbridge

STOCKS TO WATCH

-- Canon Inc

Canon said on Thursday it would spend as much as 50 billion yen to buy back its own shares between Sept. 10 and Nov. 12 to improve its capital efficiency.

Under the plan, it will buy back as much as 1.2 percent of its outstanding shares, it said in a statement.

-- Toyota Motor Corp and other automakers

The Japanese government said on Thursday it would turn down about 52,000 applications received a day earlier under its cash-for-clunkers programme after hitting the budgeted amount for the subsidies. (Reporting by Aiko Hayashi; Editing by Michael Watson)

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