Nikkei claws up, gains limited by economic worries

* Nikkei edges up, but worry about economic recovery weighs

* Investors wary ahead of Europe bank “stress test” results

* Technicals suggest recent falls may be nearing end

* Next target 9,600, roughly level of 25-day MA – analyst

By Elaine Lies

TOKYO, July 21 (BestGrowthStock) – Japan’s Nikkei average clawed
higher on Wednesday, but gains were limited amid doubts over the
momentum of the U.S. economic recovery as the market waited for
events later this week, including the results of European bank
“stress tests.”

While charts suggest the recent falls in the Nikkei might be
coming to an end, a number of lacklustre U.S. indicators
including Tuesday’s housing starts are keeping investors wary,
with few willing to actively buy before Japanese earnings pick up
steam next week.

New U.S. home construction hit its lowest level in eight
months in June, further evidence that the U.S. economy lost
momentum in the second quarter, but a rise in building permits
offered hope of a pickup in homebuilding. [ID:nN20249501]

“While external factors are not necessarily bad, there have
been a number of U.S. indicators coming in below expectations,
and this has produced a lot of uncertainty about the U.S.
economic recovery,” said Noritsugu Hirakawa, a strategist at
Okasan Securities.

“Investors are reluctant to move ahead of the results of the
European bank stress tests, and then from next week Japanese
earnings pick up. So I think we’ll probably move sideways for the
rest of the week.”

The results of the stress tests, both the aggregate outcome
and that of individual banks, will be released on Friday.
[ID:nLDE6601T6] [ID:nLDE660160]

The market is also waiting for Fed Chairman Ben Bernanke’s
semi-annual testimony before Congress on Wednesday and Thursday,
with investors looking for any comments that could boost
speculation about more monetary accommodation — speculation that
helped boost Wall Street on Tuesday.

The benchmark Nikkei (.N225: ) inched up 0.3 percent or 21.19
points to 9,321.65, while the broader Topix (.TOPX: ) edged up 0.1
percent to 833.43.

Orders placed through foreign brokers prior to the open
showed that foreign investors were net sellers for the second day
in a row, and one market player said talk of selling by European
investors had also fed selling.

“The Nikkei might rise enough to erase yesterday’s losses,
but activity is likely to be limited mainly to day traders, who
will buy at the lows and then move to take profits at any highs,”
said Kenichi Hirano, operating officer at Tachibana Securities.

“The market now appears to be consolidating in a 9,100 to
9,500 range, after which it could perhaps break above 9,500. But
this will take time.”

Resistance is strengthening at the level of the Nikkei’s
25-day moving average around 9,600, Hirakawa said. The 25-day
moving average is a proxy for a one-month moving average and
closely watched in Japan.

In a sign that recent drops, which saw the Nikkei lose 1.8
percent last week, may be coming to an end, the Nikkei’s MACD has
narrowly avoided a bearish cross and appears to be levelling out.

Its slow stochastic — a measure of how oversold the market
is and whether it is in a short-term up or down trend —
continues to fall, but now is deep within oversold territory.

SHIPPERS STEAM HIGHER

Hopes for robust earnings were enough to send some shares
higher.

Mitsui O.S.K. Lines (9104.T: ) gained 0.7 percent to 570 yen
after the Nikkei business daily said the shipping firm likely had
a pretax profit of roughly 36 billion yen ($412 million) in the
April-June quarter compared to a loss of 11.4 billion a year
earlier, with its container ship business in the black for the
first time in seven years.

Sapporo Holdings (2501.T: ) climbed 2.6 percent to 394 yen
after the Nikkei business daily said the brewer is likely to
report an operating profit of more than 1 billion yen ($11.4
million) for the January-June half, beating prior expectations of
a loss of 500 million yen.

It compares with a 1.3 billion yen profit posted in the same
period the year before.

Sharp Corp (6753.T: ) extended gains to rise 1.4 percent to 971
yen after saying on Tuesday it would enter the electronic reader
and book markets, hoping to grab a slice of the hot but
increasingly crowded sector popularised by Apple Inc (Read more about Apple stock future.) (AAPL.O: ) and
Amazon.com (AMZN.O: ). [ID:nTOE66J04I]

Sharp shares ended the previous day up 1.5 percent after the
news.

Nikkei claws up, gains limited by economic worries