TOKYO, March 4 (Reuters) - Japan's Nikkei stock average is
likely to dip back towards a 26-year low on Wednesday on
persistent worry about U.S. banks, although exporters such as
Canon Inc (7751.T: Quote, Profile, Research) are set to be bought on a weaker yen.

U.S. stocks fell in volatile trade, with the S&P ending below
the key psychological level 700 for the first time since October
1996 as uncertainty about the amount of money needed to shore up
the financial system overshadowed a hunt for bargains.
Investors may home in on Nissan Motor Co (7201.T: Quote, Profile, Research) after the
Nikkei business daily said on Wednesday that Nissan has set its
global auto production target for the first half of the business
year at roughly 1.29 million units, down 27 percent from a year
earlier and the lowest level in eight years.

"The macroeconomic picture is pretty bad, but we're likely to
see buying at the lows, with the expectations of Japanese
government support for the stock market also providing support,"
said Hirochi Nishi, general manager at the equity division of
Nikko Cordial Securities.

The benchmark Nikkei .N225 is likely to move between 7,050
to 7,250, supported by buying of exporters after the dollar rose
above 98 yen on safe-haven buying in the face of uncertainty over
banks. JPY=

On Tuesday the Nikkei fell to a four-month low of 7,088,
within sight of a 26-year low just under 7,000 set last October,
before closing at 7,229.72.

In a sign that the market is likely to fall, Nikkei futures
traded in Chicago 2NKc1 closed at 7,065 compared to the Osaka
close of 7,210. JNIc1
----------------------MARKET SNAPSHOT @ 2247 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 696.33 -0.64% -4.490
USD/JPY JPY= 98.18 0.03% 0.030
10-YR US TSY YLD US10YT=RR 2.8862 -- 0.022
SPOT GOLD XAU= 914.15 -0.17% -1.550
US CRUDE CLc1 41.65 0.00% 1.500
DOW JONES .DJI 6726.02 -0.55% -37.27
-------------------------------------------------------------
> S&P below 700 as banks' future still in question [.N]
> Dollar gains as US bank woes bolster safe-haven allure [USD/]
> Bonds down on supply; weaker stocks check losses [US/]
> Gold falls to 3-wk low, liquidation gathers steam [GOL/]
> Oil rises nearly 4 pct on OPEC, stock bounce [O/R]
STOCKS TO WATCH

-- Fast Retailing Co Ltd (9983.T: Quote, Profile, Research)
The firm said monthly same-store sales at its Uniqlo casual
clothing chain rose 4.2 percent year-on-year in February, thanks
to solid sales of spring items like parkas and colour jeans.

-- Seven & I Holdings (3382.T: Quote, Profile, Research),

Japan's largest retailer, Seven & I Holdings, now expects to
post a smaller profit for the year that ended in February, as a
deepening retail slump hit its supermarkets and department
stores, although profits at its convenience store chain remained
solid. [ID:nT345160]

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

Nissan said on Tuesday it would build the new compact NV200
van at its Barcelona plant for the European market, where sale of
the light commercial vehicle (LCV) will begin in the second half
of this year. [ID:nT221310]
(Reporting by Elaine Lies; Editing by Edwina Gibbs)