Nikkei set to hug lower end of narrow band

TOKYO, June 3 (Reuters) – The Nikkei average is expected to
hug the lower part of its recent tight range on Friday as
investors braced for critical U.S. job data that could cement
fears of slower growth, though cheap valuations and
options-related short covering are likely to provide support.
The Nikkei has traded narrowly between 9,400 and 10,000 for
the past few weeks as uncertainty over how quickly Japanese
companies can recover from the earthquake in March and the
ongoing nuclear crisis kept investors on the sidelines.
Investors are not sure when the government will be able to
pass a large supplementary budget for rebuilding after the
quake, even after Japanese Prime Minister Naoto Kan survived a
no-confidence vote on Thursday.
Kan offered to resign once he has overcome the worst of the
country’s nuclear crisis to quell rebellion in his own party but
lack of clarity on exactly when he will step down means the
political outlook remains murky.
“There’s clear split in the ruling party. The market is
watching how the government will push ahead with the extra
budget,” said Hiroichi Nishi, general manager at SMBC Nikko
Securities.
Still, with shares on the Tokyo Stock Exchange’s main board
trading roughly at around book value, few market players are
eager to sell stocks aggressively.
Nikkei futures puts with strike price of 9,500 have large
open interest of 35,000 lots, which suggests that market players
have hedged against downside in the Nikkei and that buy-back is
likely below that level.
Analysts expect the Nikkei to trade between 9,500 and 9,650.
The benchmark Nikkei fell 1.7 percent to 9,555.04 on
Thursday, giving up a large portion of gains accumulated
over the past two sessions. The broader Topix dropped
1.6 percent to 825.76.
Nikkei futures in Chicago <2NKc1> ended at 9,565, up 15
points from their Osaka  close.

———————-MARKET SNAPSHOT @ 2241 GMT ————
INSTRUMENT   LAST       PCT CHG   NET CHG
S&P 500                   1312.94     -0.12%    -1.610
USD/JPY                   80.93        0.01%     0.010
10-YR US TSY YLD     3.0315          —     0.087
SPOT GOLD                 1533.04      0.03%     0.490
US CRUDE                   100.75       0.35%     0.350
DOW JONES                 12248.55    -0.34%    -41.59
————————————————————-

> Wall St ends flat after volatile day; jobs ahead
> Dollar down on Moody’s warning, euro at 1-month high
> Bonds sell off ahead of key US payrolls report
> Gold ends down but off session low as dollar drops
> Oil rises on dollar, weighs OPEC, US inventories
STOCKS TO WATCH
— Fast Retailing
Japan’s leading clothing chain operator said on Thursday
that sales at Japanese outlets of its Uniqlo chain fell 1.6
percent in May from a year earlier as cooler spring weather
outweighed the benefits of anniversary and holiday sales
campaigns.
Fast Retailing has projected a 3 percent year-on-year
increase in same-store sales at its Japan Uniqlo stores for the
second half of its business year that ends in August, after
sales fell 9.9 percent in the first half.
— Sony
Hacker group says it has broken into another Sony Corp
network, claiming it compromised accounts of more than
1 million users of sonypictures.com.
This is the latest embarrassment in an ongoing security
crisis for Sony, which discovered in April that hackers had
broken into its networks, stealing data from more than 100
million accounts.