Nikkei set to extend gains on strong global stocks, weaker yen

TOKYO (Reuters) – Japan’s Nikkei average was expected to extend gains on Thursday after strong U.S. data backed the view of an improving global economic outlook, helping to drive global markets higher and as the yen weakened further against the dollar.

The main Wall Street (.N: Quote, Profile, Research) indices rose as investors bought shares of stronger-performing companies ahead of the quarter end with the mood bolstered as the U.S. labor market showed signs of strength.

The dollar rose to around 83.19 yen on Wednesday, a level last seen on March 11, when it initially fell after Japan’s earthquake. It traded at around 83.10 yen on Thursday.

Nikkei futures last traded in Chicago at 9,790, 80 points above the last closing level in Osaka of 9,710.

“A strong performance on global equities will help investors to overcome worries over the nuclear plant and the risk of severe power shortages in the summer,” said Hiroichi Nishi, general manager at Nikko Cordial Securities.

“Today is the last day of the financial year, so we may see a bit more window dressing driving stocks higher.”

Analysts expect the Nikkei to trade between 9,700 and 9,900 on Thursday.

The Nikkei (.N225: Quote, Profile, Research) ended Wednesday’s session up 2.6 percent or 249.71 points at 9,708.79. The broader Topix index (.TOPX: Quote, Profile, Research) advanced 1.9 percent to 866.09.

All eyes will again be on Tokyo Electric Power Co (9501.T: Quote, Profile, Research) (TEPCO) which on Wednesday lost another 18 percent, adding to a slide to a 47-year low a day earlier as the government was reported to be pondering whether to nationalize the operator of a stricken nuclear plant.

Reuters sources said a large buy order for around 40 million shares adding up to about of 2.5 percent of all outstanding TEPCO shares was detected at the end of Wednesday’s session, but sources were unable to confirm who placed it.

TEPCO’s rebound would likely help sentiment, driving the Nikkei above 9,900 analysts said.

Japanese shares have shed about 7 percent since the March 11 earthquake and tsunami, and a subsequent nuclear safety crisis, triggered the biggest two-day rout in the market since 1987. In contrast, the MSCI index of Asian shares outside Japan (.MIAPJ0000PUS: Quote, Profile, Research) has gained 4.7 percent.

STOCKS TO WATCH

— Nissan Motor Co (7201.T: Quote, Profile, Research)

Nissan and France’s Renault SA (RENA.PA: Quote, Profile, Research) are leaning toward establishing a holding company that would put the two companies under a single umbrella, Nissan President Carlos Ghosn told the Nikkei business daily. Trading in Nissan shares was suspended by the Tokyo bourse from 2320 GMT.

–Dainippon Sumitomo Pharma (4506.T: Quote, Profile, Research), Takeda Pharma (4502.T: Quote, Profile, Research)

Dainippon Sumitomo Pharma Co said it signed a licensing deal that gives Takeda Pharmaceutical Co exclusive marketing rights to its antipsychotic drug in most of Europe, the Nikkei business daily reported.

Takeda will make a one-time payment of 10 billion yen ($121 million) to Dainippon for the rights to sell the drug, lurasidone, in Switzerland, Norway, Turkey, Russia and the member nations of the European Union excluding the UK, the Nikkei said.

Separately, Amgen Inc (AMGN.O: Quote, Profile, Research) and Takeda Pharmaceutical said their experimental drug, motesanib, had failed to improve overall survival in a late-stage study of patients with advanced lung cancer.

–Renesas Electronics Corp (6723.T: Quote, Profile, Research)

Renesas is in the final stages of negotiations to sell a U.S. semiconductor factory to a German company, the Nikkei business daily said on Wednesday.

Japan’s leading semiconductor maker seeks to sell the Roseville, California, facility to Telefunken Semiconductors GmbH for an estimated 5 billion yen. The plant makes microchips and microcontrollers for vehicle engines and power trains, supplying U.S. and European automakers, the Nikkei said.

(Reporting by Antoni Slodkowski; Editing by Michael Watson)

Nikkei set to extend gains on strong global stocks, weaker yen