Nikkei set to rise, may test a six-month high

Wed Nov 21, 2012 11:28pm GMT

TOKYO, Nov 22 (Reuters) - Japan's Nikkei share average is
set to open firmer on Thursday and is within sight of a
six-month high on expectations a sharply weaker yen will boost
earnings for exporters.
    The dollar rose as high as 82.55 yen, its strongest
level since early April, on a pledge by the main opposition
Liberal Democratic Party, tipped to take power in an election
next month, to push for further central bank easing. A softer
yen allows exporters to earn more when they repatriate overseas
earnings, and boosts their competitiveness. 
    "Investors are increasingly relieved that exporters'
earnings will be better than expected if the yen's weakness
continues," said Hiroichi Nishi, general manager at SMBC Nikko
Securities.
    But he added that with U.S. markets closed for the
Thanksgiving holiday on Thursday and the Japanese market closed
on Friday for Labor Day, volume may stay low and gains could be
trimmed in late trade.
    "Investors are likely to chase the market higher in early
trade and secure profits later before the three-day weekend,"
Nishi said.
    The Nikkei climbed 0.9 percent to end at a two-month
high of 9,222.52 on Wednesday, and the broader Topix 
advanced 0.7 percent to 767.01.
     Nikkei futures in Chicago closed at 9,325, up from
the close in Osaka of 9,220.
    Market players said the Nikkei was likely to trade between
9,200 to 9,350 on Thursday. If the index breaches the
9,300-line, it will be the first time since May.
    Market analysts said investor sentiment remains upbeat, but
markets are closely watching talks by U.S policymakers on how to
avoid the U.S. "fiscal cliff," which has raised fears about the
direction of the world's largest economy. 
    "A lot of investors have positions to unwind when the Nikkei
reaches 9,400," said Yutaka Miura, senior technical analyst at
Mizuho Securities. "Until there is a clear sign that the U.S.
fiscal cliff is resolved, the Nikkei's upside will likely be
capped around this level as major Japanese stocks are highly
sensitive to the health of the U.S. economy."
 
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    STOCKS TO WATCH
    
    --Toyota Motor Corp 
    Toyota Motor is recalling about 150,000 Tacoma mid-size
pickup trucks from the model years 2001 to 2004 in cold-weather
U.S. states because the spare tire could fall off.