TOKYO (Reuters) - Japan's Nikkei share average is expected to open higher on Friday, targeting two-week highs above 9,000 on investor optimism after the Federal Reserve launched new stimulus for the U.S. economy, but a stronger yen could cap gains.
The yen hit a seven-month high of 77.13 per dollar on Wednesday, and was quoted at 77.64 yen on Friday. A stronger yen is usually a negative factor for exporters such as car makers.
"The market will start out higher today, and some of the recently oversold sectors will be bought back today, but there are limits to Japan's gains," said Kenichi Hirano, operating officer at Tachibana Securities.
"The dollar weakened against the yen, which is going to weigh on exporter shares and be a drag on the upside."
Strategists said the Nikkei .N225 was likely to trade between 8,950 and 9,100. Nikkei futures in Chicago closed at 9,000 on Thursday, up 0.9 percent from the Osaka close of 8,920.
The Fed said it would buy $40 billion of agency mortgage debt per month and pledged to maintain it until the U.S. unemployment rate, currently at 8.1 percent, significantly improves.
Friday's special quotation, or "SQ", to settle Nikkei futures and options contracts expiring in September was expected to go smoothly, the strategists said.
On Thursday, the Nikkei rose 0.4 percent to 8,995.15, while the broader Topix .TOPX index added 0.3 percent to 744.23.
The Nikkei is up 1.4 percent so far this week and 6.4 percent for the year.
Reporting by Dominic Lau and Lisa Twaronite; Editing by John Mair