Nikkei edges up but yen weighs; Intel helps techs

* Nikkei up on short-covering after 2.1 pct drop on Tuesday

* But gains capped as yen remains near 15-year high

* View on further yen rise sparks earnings worry -strategist

* Elliott Wave shows Nikkei may test 10,000 if 9,311 held

By Aiko Hayashi and Chikafumi Hodo

TOKYO, Oct 13 (BestGrowthStock) – Japan’s Nikkei average inched up
0.2 percent on Wednesday as an advance in U.S. stocks (Read more about the stock market today. ) and upbeat
forecasts by Intel Corp (INTC.O: ) brightened sentiment and
prompted short-covering.

But investors were reluctant to chase the Nikkei aggressively
higher as the yen lurked near a 15-year high versus the dollar
hit earlier this week.

The market mood improved after the Nikkei lost more than 2
percent on Tuesday, with chip-related stocks advancing after
shares of Intel, the world’s largest chipmaker, rose on strong
fourth-quarter sales and margins. [ID:N11136922]

The Nikkei also received support after Japanese core
machinery orders unexpectedly jumped 10 percent in August.
[JPMORD=ECI]

“The market recovered some ground after Japanese stocks fared
much worse than overseas markets yesterday due to the strong yen.
It also received some positive impact from Intel’s earnings,”
said Masaru Hamasaki, senior strategist at Toyota Asset
Management.

“But after dollar/yen fell below 82 yen, a growing consensus
in the market is that the yen will probably continue to advance
little by little and that has sparked worries about the outlook
for corporate earnings.”

The benchmark Nikkei (.N225: ) ended up 14.87 points at
9,403.51. On Tuesday, it fell 2.1 percent in its biggest daily
loss in a month.

The broader Topix (.TOPX: ) dropped 0.2 percent to 822.65.

Intel’s forecasts raised hopes that the technology sector
could end 2010 on a strong note, pushing up chip-related shares,
though Hamasaki noted that the impact on the overall market was
limited because it was not as if the company revised up their
earnings outlooks.

Chip-gear maker Tokyo Electron Ltd (8035.T: ) gained 1.3
percent to 4,550 yen, while Nikon Corp (7731.T: ) rose 0.9 percent
to 1,599 yen and Yokogawa Electric Corp (6841.T: ) climbed 2.6
percent to 599 yen.

Still, the Nikkei struggled to post strong gains due to the
strength of the yen.

The dollar gained 0.2 percent to 81.86 yen (JPY=: ), not far
away from a 15-year low of 81.37 struck on Monday, though it was
supported by nervousness that Japanese authorities could
intervene the closer it gets to its record low of 79.75 yen.

Finance Minister Yoshihiko Noda said in parliament that he
could not answer whether or not Japan would conduct intervention.
[FRX/]

U.S. stocks (Read more about the stock market today. ) hit fresh 5-month highs on Tuesday as details
from the Federal Reserve’s latest meeting showed the U.S. central
bank may once again flood markets with cheap cash “before long”
to further boost growth. [.N]

The currency market has become very short dollars on QE
expectations.

On the technical front, the Nikkei was expected to be
supported by positive signals.

The Nikkei faces strong support at the 38.2 percent
retracement of its September-October rally and its 55-day moving
average, both of which come in around 9,365.

Elliott Wave analysis shows the Nikkei could rally to 10,000
as long as it holds above 9,311.

EARNINGS IN FOCUS

With Japan’s earnings season getting into full swing later
this month, earnings stories have started to drive stock prices.

Shares of Best Denki Co (8175.T: ) surged 11 percent to 222 yen
after the operator of consumer electronics stores lifted its
full-year operating profit forecast by 30 percent as Japan’s
hottest summer in a century helped sales of air conditioners.

But Tokyo Steel Manufacturing Co (5423.T: ) shed 5.4 percent to
921 yen after Japan’s biggest construction steel maker revised
its six-month parent operating forecast down to a 1.5 billion yen
loss from a 1.7 billion yen profit.

Tokyo Steel had to raise prices on all products in September
to pass on higher steel scrap costs.

Fast Retailing (9983.T: ) extended falls made since the
operator of the Uniqlo discount clothing chain forecast its first
profit fall in four years, shaking investor confidence in one of
the few Japanese retailers thought to have strong growth
prospects.

The stock fell 2.4 percent to 10,910 yen, after losing 9.8
percent on Tuesday. [ID:nTOE69B038]

Some 1.89 billion shares changed hands on the Tokyo
exchange’s first section, down from a five-month high of 2.88
billion booked last Wednesday.

Declining stocks outnumbered advancers, 892 to 604.
(Additional reporting by Reuters FX analyst Krishna Kumar in
Sydney; Editing by Joseph Radford)

Nikkei edges up but yen weighs; Intel helps techs