TOKYO, Sept 9 (Reuters) - Japan's Nikkei average is likely to rise on Thursday, lifted by short-covering after successful bond auctions in Portugal and Poland helped ease worries about Europe's debt problems and pushed up U.S. and European stocks.
Nikkei futures traded in Chicago closed at 9,120, up 1.2 percent from the Osaka close. The benchmark Nikkei on Wednesday lost ground to edge closer to a 16-month low, hurt by the yen's advance to a fresh 15-year high and a revival of concerns over European banks.
"Following an uneventful bond auction in Portugal, the market environment seems to have improved a bit as the revival of worries about Europe's financial situation had led to the yen's rapid advance and hit Tokyo stocks the previous day," said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.
"But even though the yen's advance seems to be at a halt for now, dollar/yen is still trading on the 83 yen level, and market players will need to carefully watch moves in the currency and other Asian stock markets as well as Nikkei futures during the day."
Market sentiment improved after a successful auction of Portuguese debt eased concerns about the credit-worthiness of weaker European economies.
Portugal raised 1.04 billion euros, helping soothe fears about government funding in Europe. Poland's sale of five-year bonds also saw solid demand.
On Thursday, the Nikkei average is likely to move between 9,000 and 9,200, market players said. It fell 2.2 percent the previous day to 9,024.60 after falling as low as 8,997.63, back towards a 16-month low of 8,796.45 hit on Sept. 1.
In early Asia trade, the dollar traded at 83.86 yen after falling as low as 83.34 yen on Wednesday, a new 15-year low, with traders testing Japanese authorities' pain threshold for currency strength.
Investors fret about a stronger yen as it eats into exporter profits and undermines the sector's competitiveness.
U.S. stocks rose as banking shares gained ground, while a key European index, the FTSEurofirst 300, rose 1 percent to a four-month closing high.
In Japan, Wednesday's drop took the Nikkei below 9,190, around its 25-day moving average, which had served as resistance from August until this week. The 25-day moving average is considered a proxy for a one-month moving average and is closely watched in Japan.
Market analysts see strong support around 8,800, and after that, the next target is 8,697, a 61.8 percent retracement of the Nikkei's rally from its March 2009 low to its April 2010 high.
The bottom of the Nikkei's Ichimoku cloud lies around 9,500, forming resistance for the index. Ichimoku charts are popular with Japanese traders.
STOCKS TO WATCH
-- Sony Corp
Sony Pictures Entertainment, a division of Sony, will partner with Marvel Entertainment to animate characters such as Iron Man, X-Men and Blade in Japan and broadcast them worldwide, the Nikkei business daily reported.
-- Nippon Building Fund Inc,
Nippon Building Fund Management, which manages Japan's largest real estate investment trust, is not planning to merge it with another REIT and will focus on buying up new properties to drive earnings growth, its CEO said.
Nippon Building Fund Inc, the firm's listed entity, which holds a portfolio of office buildings across Japan worth 780 billion yen ($9.3 billion), has not bought any properties in the past two years, citing a lack of attractive targets. (Reporting by Aiko Hayashi; Editing by Joseph Radford)