TOKYO, March 10 (Reuters) - Japan's Nikkei is likely to fall on Tuesday after Wall Street ended weaker on Merck's (MRK.N) proposed takeover of Schering-Plough SGP.N and some market players expect the Nikkei to break below a 26-year low hit in October.
"The Nikkei will probably break below the 7,000 mark as the economic outlook in the United States is still bad," said Yoku Ihara, manager at Retela Crea Securities.
The Nikkei booked a 26-year closing low of 7,086.03 on Monday. In late October, it touched a 26-year low of 6,994.90.
"Foreigners continue to sell stocks and it seems like investors are turning to cash from stocks. But those who sell don't want to sell too aggressively as no one knows when the government will unveil measures to tackle low stock prices," he said.
Nikkei futures traded in Chicago 2NKc1 closed at 6,980 on Monday, 70 points below the Osaka close JNIc1, pointing to a slightly lower open.
Market participants expect the benchmark Nikkei .N225 to trade between 6,900 and 7,100 on Tuesday. It fell 1.2 percent the previous day.
The broader Topix .TOPX lost 1.5 percent on Monday to book a fresh 25-year closing low. ----------------------MARKET SNAPSHOT @ 2315 GMT ------------
INSTRUMENT LAST PCT CHG NET CHG S&P 500 .SPX 676.53 -1% -6.850 USD/JPY JPY= 99.07 0.3% 0.300 10-YR US TSY YLD US10YT=RR 2.8644 -- 0.000 SPOT GOLD XAU= 919.6 -0.15% -1.350 US CRUDE CLc1 47.26 0.40% 0.190 DOW JONES .DJI 6547.05 -1.21% -79.89 ------------------------------------------------------------- > Wall St slips as drug M&A overshadows banks [.N] > Dollar up as safe-haven bid continues on bank woes [USD/] > Bonds slip as supply worries offset safety bids [US/] > Gold slides 2.3 pct on dollar rise, weak demand [GOL/] > Oil jumps 3 pct on US-China tensions, OPEC [O/R]
STOCKS TO WATCH
-- Takeda Pharmaceutical Co (4502.T) and other drugmakers
Merck & Co Inc (MRK.N) said on Monday it would acquire Schering-Plough Corp SGP.N for $41.1 billion, uniting the makers of cholesterol drugs Zetia and Vytorin in the second megadeal for big pharma in weeks. [ID:nN09437800]
Separately, investors will watch Takeda after the stock dived 13 percent on Monday, plunging by its daily limit on fears the replacement for its best-selling diabetes drug could be delayed by years in the United States. It did not trade during the day. [ID:nT239013]
-- Toshiba Corp (6502.T)
Toshiba plans to start production of solid-state drives overseas to cut costs and increase output, beginning assembly in the Philippines as early as April, the financial daily Nikkei said in its Tuesday edition. [ID:nN09465302]
-- Sumitomo Corp (8053.T)
Sumitomo has reached an agreement to form a silicon carbide joint venture in Saudi Arabia, with most production to be shipped to Japan, the financial daily Nikkei said in its Tuesday edition. [ID:nN09464215] (Reporting by Aiko Hayashi; Editing by Edwina Gibbs)