Nikkei edges higher as autos power up, gains capped

* 25-day moving average around 11,000 resistance for now

* Isuzu climbs after raising earnings estimate

By Elaine Lies

TOKYO, April 20 (BestGrowthStock) – Japan’s Nikkei average clawed up
0.4 percent on Tuesday, a day after its biggest percentage loss
in two months, with exporters rising though wariness about
tighter financial regulations capped gains.

Carmakers rose, with Isuzu Motors (7202.T: ) up following an
outlook hike and Suzuki Motor (7269.T: ) gaining after a report
that it plans to boost output in India. [ID:nSGE63I0LU]

But gains were limited, with investors still wary after
concern about fraud charges against Goldman Sachs Group Inc
(GS.N: ) revived long-term worries about tighter financial
regulation, while worry about China’s attempts to control its
real estate market sent Shanghai shares tumbling.

Market players said the news that U.S. regulators had charged
Goldman Sachs with fraud over its handling of a debt product tied
to subprime mortgages had mainly been used as an excuse to take
profits on Monday.

“The market’s taking a bit of a breather today after being
sold so sharply yesterday, but it’s still hard to predict
direction and we can’t say the yen is definitely weakening,” said
Kenichi Hirano, operating officer at Tachibana Securities.

“If the dollar could rise to 93 yen, the mood in the market
would really change. But technically, the picture for stocks
right now isn’t that good.”

The benchmark Nikkei (.N225: ) gained 46.24 points to 10,955.01
by midday after falling 1.7 percent to 10,908.77 on Monday. The
broader Topix (.TOPX: ) gained 0.6 percent to 976.69 yen.

The Nikkei’s 25-day moving average, currently a little above
11,000, is likely to prove short-term resistance.

Initial support lies near 10,800, a roughly 38.2 percent
retracement of a two-month rally that started in early February
and pushed the Nikkei up to an 18-month peak of 11,408.17 in
early April. Below that a 50 percent retracement of that same
rise lies roughly around 10,600.

But the benchmark’s losses over the past two trading days
have sent its relative strength index (RSI) down as far as 48
from a high last week of 76. Anything from 70 and above is
considered overbought, while 30 and below is oversold.

“Given that the Nikkei has fallen some 3.2 percent over the
last two trading days, investors are likely to buy at first on
the sense that prices are now comparatively good, with a halt in
the yen’s rise boosting exporters,” said Hiroichi Nishi, general
manager at the equity division of Nikko Cordial Securities.

“But there’s a lot of uncertainty out in the international
markets, including China’s recent steps to control the real
estate market, as well as various international meetings.”

Beijing ordered local governments on Monday to take steps to
control speculative buying of real estate, sending Shanghai
shares (.SSEC: ) tumbling nearly 5 percent. [ID:nTOE63G016]

With Japanese corporate earnings results set to move into
full gear from next week, the market is growing increasingly
attentive to earnings reports and forecasts, though market
players warned that high expectations could lead to falls if
results were merely in line with forecasts.

Isuzu Motors climbed 5 percent to 275 yen, becoming the top
percentage gainer on the Nikkei 225, after the automaker raised
its net estimate for the year ended in March to a profit of 8
billion yen ($86.54 million) from a loss of 5 billion yen.

Suzuki gained after the Nikkei business daily reported that
it plans to boost engine output capacity in India by about 30
percent to more than 1.25 million units a year by setting up a
new line dedicated to low-pollution models.

It rose 1.8 percent to 1,964 yen, outperforming the transport
equipment subindex (.ITEQP.T: ), which rose 1.2 percent.
($1=92.43 Yen)
(Editing by Michael Watson)

Nikkei edges higher as autos power up, gains capped