Nikkei likely to trade narrowly, eyes on earnings

TOKYO (BestGrowthStock) – Japan’s Nikkei average is set to trade narrowly on Tuesday, remaining firm after the Dow industrials hit their highest close in 19 months on expectations of solid earnings but with profit-taking likely to limit gains.

Tokyo Steel (5423.T: ) is likely to draw attention after the Nikkei business daily said Japan’s biggest maker of construction steel, will raise production to 180,000 tonnes in April, up 20 percent from March, in respond to a rebound in steel demand throughout Asia.

Market players said the benchmark Nikkei (.N225: ) would be range-bound ahead of a number of big events, including an earnings report by tech bellwether Intel Corp (INTC.O: ) later on Tuesday.

“There will continue to be some concern about overheating in the market but demand overall isn’t bad,” said Kenichi Hirano, operating officer at Tachibana Securities.

“Still, at this point the market lacks strong reasons to either buy or sell.”

The Dow (.DJI: ) closed at 11,005.97, its highest close since September 2008. Other U.S. stock indexes also rose on expectations of good earnings, though some in the market said further rises might be difficult without significant positive surprises.

After the bell, aluminum company Alcoa Inc (AA.N: ) kicked off the U.S. earnings reporting period by posting a narrower first-quarter loss and matching analysts’ consensus view.

In a sign of underlying optimism about the market’s near-term prospects, the CBOE Volatility Index (.VIX: ), a popular measure of investor fear, hit its lowest close since July 19, 2007.

The Nikkei is likely to move between 11,150 and 11,350, market players said. It closed at 11,251.90 on Monday.

In a sign the market may open higher, Nikkei futures traded in Chicago closed at 11,295, up 0.3 percent from the Osaka close. > Dow tops 11,000 on profit bets; Alcoa in line (.N: )

STOCKS TO WATCH

— Sanyo Electric Co (6764.T: )

Sanyo’s operating profit is likely to jump 50 percent to more than 45 billion yen in the year ending March 2011, aided by the sales network of its parent company, Panasonic Corp (6752.T: ), the Nikkei business daily said.

— Sumitomo Corp (8053.T: )

The Nikkei business daily said the trading house plans to wholly acquire its joint venture in Australia with the Canadian grain giant Viterra Inc (VT.TO: ) for 5 billion yen ($54 million)

— Mitsui Chemicals Inc (4183.T: )

Mitsui Chemicals said it shut its 455,000 tonnes per year Osaka naphtha cracker on Sunday for an inspection after a suspected oil leak.

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(Reporting by Elaine Lies; Editing by Edwina Gibbs)

Nikkei likely to trade narrowly, eyes on earnings