Nikkei seen strong near 7-month high on weaker yen

TOKYO (BestGrowthStock) – Japan’s Nikkei average is expected to edge higher and seen testing a fresh seven-month high on Thursday as the yen’s recent weakness is likely to attract solid demand from investors.

Exporters’ shares are expected to be supported after the dollar’s three-day advance against the yen, helped by proposed tax cut extensions that sparked a rally in U.S. bond yields.

Still, the Nikkei’s rise could be limited by views that the market is overheated and ahead of the settlement of futures and options prices on Friday, analysts said.

“The strength of global share prices and the yen’s weakness will keep the Nikkei well-supported, but the market may be a bit overheated, which could limit strong gains,” said Hiroichi Nishi, general manager of equity marketing at Nikko Cordial Securities.

Nikkei futures in Chicago closed up 0.4 percent at 10,280 against the Osaka close of 10,140.

The benchmark Nikkei (.N225: ) is expected to move in a range of 10,200 to 10,350, analysts said.

On Wednesday, the Nikkei closed up 0.9 percent at 10,232.33, having touched an intraday high of 10,258.90 — its highest level since May 18.

Investors were reluctant about taking large new positions ahead of the settlement price on Friday.

The settlement is known in Japan as the special quotation or “SQ,” which is calculated from the opening prices of the 225 shares on the Nikkei average on the second Friday of the month.

Options traders said the Nikkei could stay around 10,250 to 10,300 until Friday as futures and options contracts expiring in December are expected to settle around their level on that day.

Financials, semiconductors help Wall St advance (.N: ) > Dollar heads for biggest 3-day rise versus yen (USD/: ) > Treasury prices all for second day on deficit fears (US/: ) > Gold falls for 2nd day as Treasuries extend (GOL/: ) > Oil down on high U.S. fuel stocks, firm dollar (O/R: )

STOCKS TO WATCH:

— TDK Corp (6762.T: )

Electronic parts maker TDK is aiming to improve profitability and lift its profit margin to double digits for the first time in four years in fiscal 2011, helped by the German electronic parts unit Epcos AG, the company’s President Takehiro Kamigama told the Nikkei business daily.

— Sanyo Electric (6764.T: )

About 400 employees of Sanyo Electric’s chipmaking subsidiary will retire next month ahead of the unit’s sale to ON Semiconductor Corp (ONNN.O: ), the Nikkei business daily reported.

— Nidec Corp (6594.OS: )

Japanese motor maker Nidec plans to buy Sanyo Electric’s mini-precision motor business for about 7 billion yen ($83 million) to increase its global market share for vibrating motors used in mobile phones, the Nikkei business daily reported.

— Toyota Tsusho Corp (8015.T: )

Toyota Tsusho, a Toyota Motor Corp (7203.T: ) group company, said on Wednesday it will build a rare earth processing plant in India and start shipping 3,000 to 4,000 tonnes a year of the minerals to Japan in 2012.

(Reporting by Chikafumi Hodo; Editing by Michael Watson)

($1=83.99 Yen)

Nikkei seen strong near 7-month high on weaker yen