TOKYO, Nov 10 (Reuters) - Japan's Nikkei average will likely inch up on Wednesday, helped by a weakening in the yen against the dollar, but gains may be limited following a recent rally that had boosted the benchmark to three-week highs.
Global equities have climbed as the outlook for the U.S. economy improved after the Federal Reserve decided to buy more debt and after encouraging U.S. jobs data. U.S. stocks hit two-year highs, though they are taking a breather this week.
"U.S. stocks paused and the same goes for Japanese stocks, but dollar/yen is trading firmly and that's a positive factor for the stock market here," said Kenichi Hirano, operating officer at Tachibana Securities.
"Global financial markets likely continue to be helped by ample liquidity, and the Nikkei still has a chance to test its July high of 9,807, which is the next upward target."
Nikkei futures traded in Chicago closed at 9,745, up 0.6 percent from the Osaka close.
The benchmark Nikkei is likely to move between 9,600 and 9,800, market players said. It fell 0.4 percent on Tuesday to 9,694.49 on profit-taking, following a more than 6 percent jump over the previous four sessions.
The Nikkei's support likely stands around its 26-week moving average, now at 9,500, while a series of technical selling is likely to block rises around 9,750-9,800, traders said.
But a clear break beyond 9,800 -- a peak hit in July -- could trigger a series of stop-loss buying and option-related triggers to pave the way for it to climb towards 10,000, traders say.
The dollar rallied broadly on Tuesday as debt risks in the euro zone's periphery weighed on the euro and as U.S. bond yields jumped. In early Asian trade, the dollar traded at 81.66, moving away from its all-time low of 79.95 yen.
Wall Street fell for a second day on Tuesday as selling accelerated into the close, led by sharp losses in bank and metal stocks.
STOCKS TO WATCH
-- Toshiba Corp
Toshiba retained its full-year operating profit outlook due to the possible impact of a strong yen and a murky global economic outlook after July-September profit more than doubled on chips.
-- Nippon Telegraph and Telephone Corp
Nippon Telegraph and Telephone Corp, Japan's largest telephone company, said it would cancel 7.97 percent of its shares outstanding, worth 470 billion yen ($5.8 billion) at the current market price, on November 15.
-- Acom Co
Consumer lender Acom said on Tuesday that it will sink deeper into the red this financial year, hit by mounting costs from refunding overcharged interest to borrowers.
-- Mitsubishi Heavy Industries Ltd, Sojitz Corp
Mitsubishi Heavy, Sojitz and China National Chemical Corp (CNCC) would build a $1.06 billion chemical factory in Russia for the government-affiliated fertilizer producer Ammony, the Nikkei business daily reported. ($1=81.09 Yen) (Reporting by Aiko Hayashi; Editing by Chris Gallagher)