Nikkei seen edging up on yen, but range-bound

TOKYO (BestGrowthStock) – Japan’s Nikkei average is set to claw back toward a six-month high hit last Friday, after the dollar rose around one percent against the yen the previous day, but gains may be limited after benchmark’s 8 percent rally in November.

The dollar made the biggest daily jump against the yen in nearly three months after a proposed extension of U.S. tax cuts triggered higher Treasury yields.

Also capping potential advances is caution ahead of Friday’s settlement price for futures and options, and a tight trading range for U.S. stocks (Read more about the stock market today. ) the previous day as investors’ enthusiasm over a tax cut extension deal was short-circuited by rising bond yields.

“The Nikkei may try hitting last week’s six month high today, but it will struggle to move much higher as the market is still generally overbought,” said Kazuhiro Takahashi, a general manager at Daiwa Capital Markets.

“A dollar/yen rate above 83 yen and resilience from Chinese stocks yesterday to talk of potential interest rates hikes will be supporting the Nikkei today,” he said.

Japanese shares hit a six month high of 10,254.00 last Friday, but have struggled to test that target again as investors lacked incentives to trade after worse-than-expected U.S. payrolls figures.

Japan’s Prime Minister Naoto Kan has also called for a cut of 5 percentage points in the effective corporate tax rate from fiscal 2011, deflecting calls for a more modest reduction, the Nikkei newspaper reported, which may lend support to the Tokyo market.

Nikkei futures in Chicago closed at 10,205.00, 0.5 percent above the Osaka close of 10,150.00

The benchmark Nikkei (.N225: ) is expected to move in a range of 10,100 to 10,250, analysts said.

> Rising rates, insider probe derail rally (.N: ) > Euro falls to session low on EBS (USD/: ) > Bonds plunge as tax plan stokes US debt worries (US/: ) > Silver rises above $30/oz first time since 1980 (GOL/: ) > U.S. crude pares losses on big API stock drawdown (O/R: )

STOCKS TO WATCH:

–Itochu Corp. (8001.T: )

Trading house Itochu has agreed to buy a 15 percent stake in a coal joint venture in Australia from Aston Resources (AZT.AX: ) for A$345 million, Aston said on Wednesday.

–Sumco Corp. <3436.T]

Sumco, a major silicon wafer producer, said on Tuesday it will likely report a net loss of 66 billion yen for the fiscal year ending January 2011, compared with a 12 billion yen net loss it previously expected. The company said falling demand for silicon wafer is hitting its bottomline.

— Mitsubishi Corp (8058.T: )

Molycorp Inc (MCP.N: ) plans to supply more than 10 manufacturers in Japan with about 1,500 tons of rare earths with about 750 tons sold via Mitsubishi Corp, chief executive officer Mark Smith told the Nikkei business daily in an interview on Tuesday.

–Sony Corp (6758.T: )

Sony Pictures Entertainment, the media division of electronics maker Sony, on Tuesday said it extended the contract of studio head Amy Pascal, keeping the powerful executive in her post for five more years.

–Astellas Pharma (4503.T: )

Cytori Therapeutics Inc (CYTX.O: ) said it signed a $10-million equity deal with Japan’s No.2 drugmaker Astellas Pharma to evaluate the potential of adipose derived stem and regenerative cells.

Astellas will buy about 1.43 million unregistered shares of Cytori common stock at $7.00 each, or 35 percent more than the stock’s Monday close.

(Reporting by Antoni Slodkowski; Editing by Edwina Gibbs)

Nikkei seen edging up on yen, but range-bound