Nikkei seen rising on optimism for U.S. jobs data

TOKYO (Reuters) – Japan’s Nikkei average is expected to rise on Friday helped by gains on Wall Street helped by expectations for a big rise in U.S. payrolls, while a weaker yen could lift exporters.

The number of Americans filing new claims for jobless aid hit the lowest level in more than 2- years last week and service sector hiring picked up in February, signs the labor market recovery was quickening.

The market is now awaiting U.S. jobless figures for February due at 1330 GMT.

With the U.S. and European markets having rallied, analysts said Japanese stocks are also likely to attract buying, especially exporters that have underperformed recently on short-term corrections.

“Substantial gains are expected in morning trade on hopes for good jobs data in the U.S., but the market may trim gains toward the close because investors remain cautious until they actually see the figures,” said Shinichiro Matsushita, a market analyst at Daiwa Securities.

The median estimate is for a gain of 185,000 jobs, according to economists polled by Reuters.

“If the figure is better than expected, the Nikkei may target 11,000 next week, but if we were to expect further rallies in the Japanese market, such good sentiment for a U.S. economic recovery has to be accompanied by a weaker yen,” Matsushita said.

The euro rallied strongly to a fresh four-month high against the dollar and the yen after European Central Bank President Jean-Claude Trichet cemented expectations for a near-term interest rate rise.

The euro fetched 115.04 yen in early Asian trade after hitting a four-month high at 115.18 on Thursday.

Market participants said euro-sensitive exporters such as presicion equipment makers like Nikon Corp (7731.T: Quote, Profile, Research) and Canon Inc (7751.T: Quote, Profile, Research), glassmakers, as well as carmaker Mazda Motor (7261.T: Quote, Profile, Research) may outperform the overall market.

They also said worries about turmoil in the Middle East have receded temporarily, with U.S. crude oil futures prices edging lower on Thursday after a Venezuelan proposal for resolving Libya’s crisis prompted traders to book profits despite skepticism about whether such a plan would work.

“Concern over developments in the Middle East is not over, but U.S. economic recovery optimism may offset it for today,” said Hiroichi Nishi, general manager at Nikko Cordial Securities.

The benchmark Nikkei (.N225: Quote, Profile, Research) ended up 0.9 percent or 93.64 points at 10,586.02 on Thursday. The broader Topix (.TOPX: Quote, Profile, Research) gained 0.6 percent to 948.69.

Nikkei futures traded in Chicago closed at 10,720, 130 points higher than their closing level in Osaka.

Analysts said the Nikkei is expected to trade between 10,650 and 10,800 on Friday.

Jobs data optimism fuels Wall St rally (.N: Quote, Profile, Research) > Euro jumps as Trichet signals April rate hike > Strong payrolls could send rates to higher range > Gold falls 1.5 pct on ECB rate talk, peace plan > Oil falls on profit taking, Libya plan eyed

STOCKS TO WATCH

— Sumitomo Electric Industries (5802.T: Quote, Profile, Research)

Sumitomo has developed a rechargeable battery that promises to cost only about 10 percent the price of lithium ion batteries, the Nikkei business daily said.

— Tokyo Gas Co (9531.T: Quote, Profile, Research)

Tokyo Gas aims to actively invest in overseas liquefied natural gas projects to secure stable supplies, the Nikkei business daily reported citing an interview with President Tsuyoshi Okamoto.

The top Japanese city gas company is considering investing not only in gas field development but also in the gas transport businesses, the Nikkei said.

— Toyota Motor Corp (7203.T: Quote, Profile, Research)

Toyota will keep the price of the Prius hybrid wagon’s lithium ion battery version down to 3 million yen ($36,440), the Nikkei business daily said.

–Mitsui & Co (8031.: Quote, Profile, Research)

Trading house Mitsui will set up a British joint venture with engineering firm Arup in developing models for making cities environmentally friendly, the Nikkei reported.

($1=82.33 Yen)

(Reporting by Ayai Tomisawa; Editing by Michael Watson)