Nikkei set to snap 5-day losing streak; Sharp falls
* Receding yen strength provides index support
* Automakers, financials rebound
* Sharp down on report to post bigger net loss
By Dominic Lau
TOKYO, April 10 (Reuters) - Japan's Nikkei average rose on Tuesday, on track to end a five-session losing run, ahead of trade data from China and a Bank of Japan policy meeting, with the yen coming off a one-month high against the dollar hit the pervious day.
The softer yen, after strengthening on the back of Friday's disappointing U.S. jobs data, gave exporter shares some breathing space and helped lift the index higher.
By the midday break, the Nikkei advanced 0.8 percent to 9,620.24 after shedding more than 5 percent in the previous five sessions and hitting the lowest closing level since Feb. 21 on Monday.
Exporters were in demand, with Toyota Motor Corp, Honda Motor Co, Nissan Motor Co and TDK Corp up between 1.6 and 2.9 percent.
Sharp Corp sagged 3.4 percent to 535 yen, below its 25-day moving average, after a Nikkei report said the electronics maker was expected to post a bigger net loss for the 2011 fiscal year than previously projected, hurt by poor sales of televisions and solar cells.
"The overall feedback from long-term investors is that there is no long-term story in place which can justify taking a two-to three-year position on Sharp," a dealer at a foreign bank said.
But it would be "a perfect day to pick up a little position" for short-term players, he said.
The trader added that many investors were on the sidelines before the Chinese data and BOJ meeting, though some were on the prowl for beaten-down stocks or cutting positions in stocks that have outpaced the broader market this year.
SHORT AUTO SECTOR
The auto sector outperformed the broader market but Nomura recommended investors short the sector, citing a halt in yen weakness.
"With the market's risk-on sentiment fading, we think high-beta sectors including automobiles and transport equipment could see spreading profit-taking in the near term," it said in a report.
"Although sector valuations continue to look relatively low, we have lowered our stance on the sector to short in view of a halt in yen depreciation, with which sector performance is closely correlated, and of signs from a technical perspective that the sector could soon enter a correction phase."
The transport equipment sub-index, home to Toyota and Nissan, rallied 32 percent in January-March, outperforming a 19.3 percent rise in the Nikkei, although it is down 4.7 percent since the start of April.
The broader Topix index was up 0.8 percent at 820.34 on Tuesday. Trading volume on the main broad was light after the halfway point, at 45 percent of its full daily average for the past 90 days.
The BOJ is largely expected to refrain from easing monetary policy, holding fire until a more thorough assessment of the economy two weeks later, which may show further action is needed to nudge inflation up towards its 1 percent goal. The central bank will hold another meeting on April 27.
Financials also bounced, with Mitsubishi UFJ Financial Group Inc up 1.8 percent. Japan's top investment bank Nomura Holdings Inc climbed 2.9 percent, boosted by a target price increase by Bank of America Merrill Lynch. (Additional reporting by Mari Saito; Editing by Jonathan Hopfner)
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