TOKYO, April 12 (Reuters) - Japan's Nikkei stock average is expected to inch lower for a second straight session on Tuesday after oil dropped nearly 3 percent and spurred a selloff in energy shares on Wall Street.
Kicking off the cautiously awaited earnings season in the United States, Alcoa Inc reported a first-quarter profit that beat estimates, but revenue of the aluminium maker missed forecasts and the stock fell 3.6 percent in post-market trade.
With market players awaiting the first post-quake earnings in Japan, trading volumes are poised to remain low and the benchmark will likely stay trapped on Tuesday between 9,612.51 -- where April Nikkei options settled last week -- and its 200-day moving average at 9,816.
"With so many uncertainties surrounding big players, investors will likely move to small-cap stocks," said Takashi Hiroki, chief strategist at Monex Securities.
"After gold, oil and other commodities fell, energy shares will come under pressure, especially after recent gains. But overall, with the situation in the country unchanged the Nikkei will probably move in a narrow range," Hiroki said.
Analysts said that while falling commodities prices will pressure energy stocks, they will also help to ease worries over the impact of rising raw material costs on input costs and margins, providing some support to the market.
Nikkei futures in Chicago (2NKc1: Quote, Profile, Research) pointed to a weaker start in Tokyo. They were at 9,650, down from the Osaka close (JNIc1: Quote, Profile, Research) of 9,720.
The benchmark index closed down 0.5 percent or 48.38 points at 9,719.70 on Monday, with volumes falling to the lowest level since the quake as investors await earnings reports.
The Nikkei has already recouped about two-thirds of the ground lost since the March 11 earthquake, but analysts said from now on potential gains before earnings will likely be hard won.
Tokyo Electric Power will remain in focus, investors said. Trade in the energy giant accounted for some 10 percent of total volume on the Tokyo bourse's main board on Monday.
Tepco could face 2 trillion yen ($23.6 bln) in special
losses in the current business year to March 2012 to compensate
communities near its crippled nuclear plant, JP Morgan said in a
research report obtained by Reuters on Monday. [ID:nL3E7FB1RB]
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