TOKYO, May 2 (Reuters) - Japan's Nikkei stock average is expected to rise on Monday and may touch 10,000 for the first time since mid-March, encouraged by gains on Wall Street, though a firmer yen could put a lid on gains and spur profit-taking.
Analysts also said trading may be subdued as Japan is in the middle of its Golden Week holidays and markets are open only on Monday and Friday this week.
"Investors may chase the market higher, but a stronger yen may put cap on exporters, so profit-taking may kick in around 9,950," said Kazuhiro Takahashi, general manager at Daiwa Securities.
If it reaches the 10,000-level, that would mark the first time since March 14, just after the massive earthquake and tsunami that devastated the country's northeast coast and sent stocks tumbling.
The U.S. dollar hit a three-year low against a basket of major currencies on Friday, with month-end capital flows likely to see further selling of the greenback as the Federal Reserve keeps short-term interest rates near zero.
Early on Monday, the dollar stood at 81.23 yen .
"If the dollar trades below 81.00 yen, the Nikkei's gains may be small," Takahashi said.
Meanwhile, commodity stocks may outperform after gold surged to a record high on Friday while oil prices also pushed higher, posting an eighth straight month of gains.[ID:nLDE73S0WL][ID:nL3E7FT0DJ]
On Thursday, the benchmark Nikkei average rose 1.6 percent to 9,849.74, its highest since March 11. The broader Topix rose 1.4 percent to 851.85. Japanese financial markets were closed on Friday for a national holiday.
Pointing to a higher open, Nikkei futures in Chicago <2NKc1>
ended at 9,935 on Friday, up from the Osaka close
----------------------MARKET SNAPSHOT @ 2308 GMT ------------
INSTRUMENT LAST PCT CHG NET CHG
S&P 500 1363.61 0.23% 3.130
USD/JPY 81.31 0.25% 0.200
10-YR US TSY YLD 3.29 -- 0.000
SPOT GOLD 1549.09 -0.93% -14.560
US CRUDE
> Dow posts best month in 2011 but Microsoft drags > US dollar under pressure, euro at 16 month high > April rally lifts bonds into positive territory > Gold jumps 2 pct to set record high for third day > Oil rises to post 8th straight monthly gain
STOCKS TO WATCH
--Sony Corp
Sony said it would resume some services on its PlayStation Network this week and offer incentives to customers to try to prevent them from turning to competitors after the theft of personal information belonging to 78 million user accounts. [ID:nL3E7G101C]
--Elpida Memory
Elpida Memory Inc will begin mass-producing DRAM chips using the world's most advanced technology in July, taking the lead away from Samsung Electronics Co, the Nikkei reported.
--Mitsui Mining & Smelting Co
Mitsui Mining in July will partially shift production at its copper foil plant in Saitama Prefecture to an overseas facility, in order to avoid possible disruptions due to anticipated power shortages in eastern Japan this summer, the Nikkei reported, citing company sources.
--Mitsubishi UFJ Financial Group
Mitsubishi UFJ Financial Group on July 1 will set up a new department to oversee the foreign operations of its banking, trust banking and securities businesses, in a bid to utilize resources within the group more effectively, the Nikkei business daily reported. (Reporting by Ayai Tomisawa; Editing by Chris Gallagher)