Nikkei seen stuck in tight band, yen’s impact limited

TOKYO (Reuters) – Japan’s Nikkei average is expected to stay in a narrow range on Wednesday, with resource-related shares seen climbing on the back of surging commodity prices and blue-chip exporters sliding further despite a weaker yen as post-quake concerns weigh.

With investors focused on the impact of the massive quake and tsunami of March 11 and the unfolding nuclear disaster, the Nikkei will likely take in stride an interest rate hike by China.

Support for the benchmark is seen at 9,500, where it settled after the post-quake panic sell-off, but some analysts say it may fall further as the market, having rebounded strongly after the disasters, has become vulnerable to negative news.

But the Bank of Japan’s purchases of exchange-traded funds, which amounted to 18.2 billion yen ($214 million) on Tuesday, under an asset purchase program adopted to bolster the economy were seen as lending some support to market sentiment.

“Manufacturers may have a hard time despite the yen. Everyone is waiting for earnings reports to start at the end of the month and until then the market will probably slowly move lower,” said Mitsuo Shimizu, deputy general manager at Cosmo Securities.

Shimizu said that with options prices settling this Friday — the first time after the quake — Tokyo stocks will likely come under more selling pressure in the near term.

The dollar fetched 85.15 yen in early Asia trade and was seen aiming for 85.93 yen, which was the non-intervention peak from September last year.

Nikkei futures in Chicago pointed to a mildly stronger start on Wednesday. They nudged higher by 40 points to 9,670, from the Osaka close of 9,630.

Analysts said the impact of the weaker yen on major exporters such as Toyota Motor Corp (7203.T: Quote, Profile, Research) or Hitachi Ltd (6501.T: Quote, Profile, Research) would likely be limited, as investors have not been able to fully price in the disruptions to supply chains and rolling blackouts amid too many uncertainties.

The Nikkei (.N225: Quote, Profile, Research) is expected to trade between 9,500 and 9,700 on Wednesday after slipping more than 1 percent the day before in a sign that the post-quake rebound has run its course as the Nikkei bounced off its 200-day moving average at 9,822.

Oil-related shares such as Japan’s largest oil and gas developer, Inpex Corp (1605.T: Quote, Profile, Research), and trading houses such as Mitsui & Co (8031.T: Quote, Profile, Research) are set to extend gains after oil prices rose on Tuesday to their highest since 2008 on supply concerns.

S&P hovers near resistance, but volume still weak (.N: Quote, Profile, Research) > Euro, sterling advance on higher rates view. Yields up on inflation worry, tightening fears (US/: Quote, Profile, Research) > Gold jumps to record over $1,450 as corn, crude surge(GOL/: Quote, Profile, Research) > Brent jumps to 2- year peak, U.S. oil slips.

STOCKS TO WATCH

— Marubeni Corp (8002.T: Quote, Profile, Research)

Marubeni, Japan’s fifth-largest trading house, will buy a stake in a shale oil project in the United States from Marathon Oil Corp (MRO.N: Quote, Profile, Research) for about $270 million, the companies said on Tuesday.

Under terms of the deal, Marubeni will receive a 30 percent working interest in Marathon’s 180,000 acres in the Niobrara Shale field in Wyoming and Colorado for $5,000 per acre.

— Hitachi Ltd (6501.T: Quote, Profile, Research)

Hitachi Displays, a unit of Hitachi, said it will outsource more LCD production to Taiwan’s Chimei Innolux Corp (3481.TW: Quote, Profile, Research) as it expects a power shortage at its factory, which is in Tokyo Electric Power Co’s (9501.T: Quote, Profile, Research) service area, the Nikkei business daily reported.

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

Toyota will reopen most of its domestic automobile plants as early as next week to start producing a limited number of models, the Nikkei business daily said.

The world’s largest automaker’s North American plants continue to operate on two shifts but it said on Tuesday that one or more of them are likely to have production disruptions due to lack of spare parts from Japan.

— Aeon Co (8267.T: Quote, Profile, Research)

Aeon said on Tuesday it will buy 4.5 billion yen in new shares that its subsidiary, Maxvalu Tohoku Co (2655.T: Quote, Profile, Research), plans to issue on May 19, in a bid to support the struggling supermarket chain operator.

(Reporting by Antoni Slodkowski; Editing by Michael Watson)

Nikkei seen stuck in tight band, yen’s impact limited