By Antoni Slodkowski
TOKYO, March 23 (Reuters) - Japan's Nikkei average is set to snap a two-day winning streak on Wednesday as investors may rush to take profits after a strong come back that was spurred by slowly improving conditions at a crippled nuclear power plant.
U.S. oil prices jumped after unrest in the Middle East spread to Yemen, further stoking concerns about disruption to supply and giving traders more reasons to let share prices consolidate around current levels, likely trapping the Nikkei in a narrow range on Wednesday.
Tokyo stocks posted their biggest two-day decline since October 1987 in the first two sessions after the March 11 earthquake and tsunami, losing as much as 20 percent as a nuclear safety crisis unfolded, but have recouped most of their losses and are now just 6 percent below the March 11 close.
"If you throw a ball from a high place, it will bounce back strongly at first, but the second and third bounce will be smaller," said Takashi Hiroki, chief strategist at Monex Inc, who expected the market to stutter on Wednesday.
Nikkei futures last traded in Chicago 40 points above the latest close in Osaka .
"It's not that the market is ignoring fundamentals. We just simply don't know them yet, as many companies are still gathering information about damage sustained during the disasters," Hiroki said.
Sony Corp cut output at five more plants and Toyota Motor Corp delayed restarting assembly lines as the global supply of parts and products began to feel the full impact of Japan's catastrophic earthquake.
The broader Topix index came back close to its 200-day moving average at 872 on Tuesday, and analysts said the immediate resistance level may prove hard to pierce as the market lacked strong trading cues.
For the Nikkei, support looms at the key 9,500 level.
Analysts said the Nikkei would likely trade between 9,450 and 9,650 on Wednesday. ---------------------MARKET SNAPSHOT @ 2311 GMT ------------ INSTRUMENT LAST PCT CHG NET CHG S&P 500 1293.77 -0.36% -4.610 USD/JPY 81.02 0.06% 0.050 10-YR US TSY YLD 3.3281 -- 0.000 SPOT GOLD 1427.89 -0.11% -1.610 US CRUDE 104.78 -0.18% -0.190 DOW JONES 12018.63 -0.15% -17.90 ------------------------------------------------------------- > Wall St slips after 3-day run; volume at 2011 low > Euro falls from 4-1/2-month high; yen in tight range > Fund managers neutral-to-bearish on Treasuries > Gold flat as rate hikes eyed; geopolitics support > Oil rises as Yemen unrest escalates, dollar falls
STOCKS TO WATCH:
--Terumo Corp
A U.S.-based unit of the firm said it had entered into a consent decree with the U.S. Food and Drug Administration and agreed to stop selling two of its products used in cardiopulmonary bypass surgery.
--Nippon Steel Corp
Nippon Steel said on Tuesday that output at the three blast furnaces at its mainstay plant in eastern Japan had recovered to pre-earthquake levels.
--Aozora Bank
Aozora does not see a need to revise its earnings forecasts for the year ending in March after Japan was hit by a devastating earthquake, tsunami and nuclear power plant accident, CEO Brian Prince told Reuters on Tuesday. (Reporting by Antoni Slodkowski; Editing by Edmund Klamann)