TOKYO, March 5 (Reuters) - Japan's Nikkei stock average is
set to rise on Thursday, buoyed by hopes for a Chinese stimulus
package that will likely lift machinery shares such as Hitachi
Construction (6305.T: Quote, Profile, Research), while a weaker yen is expected to help
exporters.

U.S. stocks rallied on Wednesday, snapping a five-day losing
streak, after news that China will increase spending on
infrastructure and manufacturing and data that showed China's
economy might be on the brink of recovery [.N]

But market players said rises were likely to be limited
despite this, with persistent worries about the economy
suppressing buying energy.

"Gains in New York were a bit sluggish, and there's still a
lot of bad factors out there," said Yoku Ihara, manager at the
investment information department of Retela Crea Securities.

"Plus the U.S. still needs to deal with the automakers,
Citigroup, and AIG, so there's no sense that this is any kind of
real turning point."

The dollar climbed to a four-month high versus the yen on
rekindled risk appetite, rising as high as 99.49 yen according to
electronic trading platform EBS, the highest since Nov. 5. JPY=

The benchmark Nikkei .N225 is likely to move between 7,300
and 7,500. It closed at 7,290.96 on Wednesday.

In a sign of how stocks may move, Nikkei futures traded in
Chicago 2NKc1 closed at 7,385, compared with the Osaka close of
7,270 JNIc1.
----------------------MARKET SNAPSHOT @ 2250 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 712.87 2.38% 16.540
USD/JPY JPY= 99.1 0.11% 0.110
10-YR US TSY YLD US10YT=RR 2.9763 -- 0.090
SPOT GOLD XAU= 904.8 -0.23% -2.100
US CRUDE CLc1 45.38 0.00% 3.730
DOW JONES .DJI 6875.84 2.23% 149.82
-------------------------------------------------------------
> China hopes, oil's surge snap Wall St 5-day rout [.N]
> Dollar climbs vs yen, buoyed by China optimism [USD/]
> Bonds sag as Wall Street rally curbs safety bid [US/]
> Gold falls as investors pocket battered equities [GOL/]
> Oil gains nearly 9 pct on U.S. crude stocks drop [O/R]
STOCKS TO WATCH

-- Mitsubishi Corp (8058.T: Quote, Profile, Research)

Mitsubishi, Japan's largest trading house, has bought a 34
percent stake in the solar power unit of Spanish contractor
Acciona SA (ANA.MC: Quote, Profile, Research), the companies said. [ID:nL4306719]

-- Mizuho Financial Group (8411.T: Quote, Profile, Research)

Mizuho, Japan's second-largest bank, said it set the merger
of its brokerage with part-owned Shinko Securities (8606.T: Quote, Profile, Research) for
May 7.

The merger between Mizuho Securities and Shinko had been
delayed after subprime-related losses widened at Mizuho
Securities. [ID:nT315067]

-- Nomura Holdings Inc (8604.T: Quote, Profile, Research)

Nomura, Japan's largest brokerage, said it will raise 299
billion yen ($3 billion) in a share sale to bolster its capital
after soured investments and costs related to its Lehman Brothers
purchase.

Nomura priced the shares at 417 yen each, a 3 percent
discount to its closing price on Wednesday. [ID:nT31896]
(Reporting by Elaine Lies; Editing by Chris Gallagher)