TOKYO, July 26 (Reuters) - Japan's Nikkei share average is likely to rebound from a seven-week low on Thursday following a small gain in the U.S. Dow Jones index, although worries about the global economy will keep the market under pressure.
Exporters may benefit from signs of stability in the yen, which is holding below its seven-week high against the dollar, hit on Monday.
"I think we are going to see some short-covering as the yen's rally appears to have stopped for now," said Yutaka Miura, technical analyst at Mizuho Securities.
"But given that there's still huge uncertainty on Europe and that U.S. economic indicators and earnings are mixed, we can't expect too much upside. The Nikkei won't probably recover all of yesterday's losses," he added.
On Wednesday, the Nikkei dropped 1.4 percent to 8,365.90, edging closer to its June 4 low of 8,238.96.
Market players said the Nikkei was likely to trade between 8,300 and 8,450 on Thursday.
Nikkei futures in Chicago <0#NIY:> closed at 8,410, up from the close in Osaka of 8,350.
On Wall Street, the Dow rose 0.5 percent, although the Standard and Poor's 500 Index was virtually flat and the Nasdaq fell 0.3 percent.
>S&P 500, Nasdaq fall on Apple's miss; Dow rises >Euro rises from 2-year low, but gains expected to fade >Prices ease but yields hold near record lows >Gold rises 1.5 pct on stimulus hopes for US, Europe >Brent hits $104 on Mideast fear, hopes for Fed action
STOCKS TO WATCH
Canon Inc cut its full-year operating profit outlook to 390 billion yen ($5 billion) from a previously forecast 450 billion yen on Wednesday, buffeted by a euro zone crisis which sent the yen climbing while sapping demand from a key export market.
-- Olympus, Terumo, Sony
Terumo has made an offer to merge with Olympus Corp , starting with an investment of 50 billion yen ($639 million) to raise its stake in the embattled camera and medical device maker to 15 percent from 2.1 percent, the Nikkei reported on Thursday.
Terumo, which also makes medical devices, plans to appeal directly to Olympus shareholders and will announce its proposal on Thursday, putting it in a competition with Sony, which has offered to invest 50 billion yen in Olympus.
Fanuc said on Wednesday its April-June operating profit fell 1.6 percent from a year earlier to 54.14 billion yen. But the manufacturer of robots maintained its half-year profit forecast of 113 billion yen.
The manufacturer of game machines and software on Wednesday reported a first-quarter loss that was half of what analysts had expected due to cost-cutting and new software titles.
Britain has approved a 4.5 billion pound ($7 billion) contract with a consortium led by Japan's Hitachi to build 92 intercity trains at a newly built factory in northern England. (Reporting by Hideyuki Sano; Editing by Richard Pullin)