Tokyo stocks set for modest gains on weaker yen vs. dollar

TOKYO (Reuters) – Japan’s Nikkei stock average is set to make modest gains on Wednesday after rising U.S. bond yields lifted the dollar against the yen and after Wall Street edged higher, albeit in thin trade.

The dollar rose to 82.51 yen on Tuesday, its highest in more than two weeks and above the 81.98 peak of March 18, the day Japanese authorities intervened to stop runaway yen gains.

“U.S. stock moves were firm, and in foreign exchange, we are seeing a shift to yen weakness,” said Takashi Hiroki, chief strategist at Monex Securities.

“But a lot of uncertainty remains over the situation at the nuclear plant and investors are going to be mindful of recent ranges.”

Analysts said they expect the benchmark Nikkei to move between 9,400 and 9,600. Nikkei futures last traded in Chicago at 9,510, 60 points above the Osaka close.

The Nikkei fell 0.2 percent, or 19.45 points, to 9,459.08 on Tuesday although it had fallen as low as 9,317.38 at one stage.

The weaker yen will help support shares of automakers, some of which started to cut output in North America due to shortages of parts after the earthquake, said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

A steady rise in U.S. yields gained traction this week as several Federal Reserve policymakers said the central bank would have to start tightening monetary policy soon to avoid inflation.

St. Louis Fed President James Bullard, a non-voting member of the Fed’s rate-setting committee, said on Tuesday the U.S. economy was strong enough to curtail the Fed’s $600 billion bond-buying program by $100 billion. (Reporting by Edwina Gibbs; Editing by Chris Gallagher)

Tokyo stocks set for modest gains on weaker yen vs. dollar