Nikkei seen supported after losses but gains limited

TOKYO (Reuters) – Japan’s Nikkei average is expected to find support on Thursday reflecting gains in overseas markets after Japanese shares fell in the last two sessions due to growing concerns over production losses by manufacturers.

But the Nikkei (.N225: Quote, Profile, Research) is seen likely to struggle to post strong gains as investors refrain from chasing shares on rallies due to uncertainty over Tokyo Electric Power Co’s (9501.T: Quote, Profile, Research) nuclear power plant crisis and worries over lost output.

The positive effect of a weaker yen on shares of Japanese exporters is expected to be limited due to concerns over bottlenecks and disrupted supply chains.

“We’ll see some rebound after losses in the last two sessions. Firmness in overseas shares is expected to draw bargain-hunting demand,” said Hiroichi Nishi, general manager of SMBC Nikko Securities.

“But a weaker yen has not necessarily turned into a strong buying factor due to worries about manufacturers’ production. Also the yen’s weakness is expected to push up import prices of oil, which is negative for the market,” Nishi said.

The yen fell to an 11-month low of 122.45 yen to the euro and a half-year low of 85.54 yen against the dollar in early Asia trade.

Nikkei futures in Chicago advanced to 65 points to 9,675, against the Osaka close of 9,610.

The Nikkei is expected to move in a range of 9,500 to 9,700 on Thursday after falling to a one-week closing low of 9,584.37 the previous day.

But it is expected face a stiff resistance around 9,820 — the point where the 25-day and 200-day moving averages crossed the previous day.

STOCKS TO WATCH

— Elpida Memory Inc (6665.T: Quote, Profile, Research)

Japanese chipmaker Elpida Memory will start producing a 4 gigabyte DRAM chip product at its plant in Hiroshima from June, the Nikkei business daily reported.

The company aims to raise 100 billion yen ($1.2 billion)in sales during the financial year starting in April 2012, the newspaper said.

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

Japanese trading house Mitsui & Co will pick up a 30 percent stake in Malaysia’s Integrated Healthcare Holdings Ltd (IHCH.OB: Quote, Profile, Research) for about 90 billion yen, the Nikkei business daily reported.

— Sony Corp (6758.T: Quote, Profile, Research)

Sony said on Wednesday it has resumed partial or full operations at five additional plants that had been shut following the earthquake on March 11 in northeast Japan.

The plants make products ranging from semiconductor lasers to Blu-ray discs to magnetic tape, the company said in a statement.

(Reporting by Chikafumi Hodo; Editing by Michael Watson)

Nikkei seen supported after losses but gains limited