Nikkei seen range-bound, pressured by yen worry

TOKYO (BestGrowthStock) – Japan’s Nikkei average is likely to move narrowly on Thursday after U.S. stocks (Read more about the stock market today. ) eked out gains on a reassuring sales forecast from retailer Target Corp (TGT.N: ) but the yen’s strength against the dollar is seen weighing on the market.

Investors are awaiting the outcome of Monday’s meeting between Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa, though many said the chance of it yielding much in the way of policy options is limited.

Nikkei futures traded in Chicago closed at 9,230, down 0.1 percent from the Osaka close. In early Asia trade, the dollar was steady at 85.46 yen, in sight of a 15-year low of 84.72 yen hit on trading platform EBS last week.

“There’s a talk in the market that domestic investors such as pension funds have come in to pick up stocks at lows, and that is supporting the market,” said Kenichi Hirano, operating officer at Tachibana Securities.

“But the Nikkei remains at a precarious level. If U.S. stocks (Read more about the stock market today. ) were to slide on some negative news again, the index could easily go below 9,000. The market is stuck in range trade in an environment with risk potential.”

The benchmark Nikkei (.N225: ) is likely to move between 9,150 and 9,350, market players said. It rose 0.9 percent the previous day to 9,240.54.

Whether the Nikkei can stay above 9,000 or not is a big focus this week, market players say, though downside tries have been checked just under 9,100 several times over the last week. The same level became support several times last year.

Below that point, the Nikkei’s next support lies at 8,697, a 61.8 percent retracement of the rally between the March 2009 low and the April 2010 high.

Market players say if the dollar breaks below 85 yen, the Nikkei could also fall below 9,000.

“There are hopes in the market for the Kan-Shirakawa meeting, but what they will really need to emphasize at the end is their support for a weaker yen, rather than a couple of economic measures,” Hirano said.

The Sankei newspaper reported on Thursday that the Bank of Japan has started considering additional monetary easing steps in line with government efforts to support the country’s economy.

The most likely option under consideration is expanding the BOJ’s fund-supply tool put in place in December, the paper said, without citing sources.

STOCKS TO WATCH

— Mazda Motor Corp (7261.T: )

Mazda Motor on Wednesday indicated that overseas recalls stemming from power-steering flaws will likely rise to 514,000 vehicles, the Nikkei business daily reported.

The automaker has already filed applications with local authorities by Tuesday to recall 215,000 vehicles in the United States and nearly 11,000 in China. It plans to broaden the net to include major export markets such as Europe and Australia, the paper said.

— JX Holdings Inc (5020.T: )

JX Nippon Oil & Energy Corp, Japan’s top refiner, said on Wednesday it reduced production at a 115,000 barrels per day crude distillation unit (CDU) at its Osaka refinery after a fire broke out earlier in the day.

The fire at the refinery, in which Chinese state energy giant PetroChina (601857.SS: ) (0857.HK: ) will take a 49 percent stake on October 1, was extinguished and there were no injuries, the oil unit of JX Holdings Inc said.

(Reporting by Aiko Hayashi; Editing by Chris Gallagher)

Nikkei seen range-bound, pressured by yen worry