Nikkei to trade narrowly, financials set to weigh

TOKYO, April 8 (Reuters) - Japan's Nikkei stock average is
likely to trade narrowly with a downward bias on Wednesday, with
financial shares such as Mizuho Financial Group (8411.T> weak
after their U.S. peers fell on worries about toxic assets.

Wall Street tumbled as earnings season began, with Alcoa Inc
(AA.N) reporting its second consecutive quarterly loss after the
bell, igniting worries about another round of poor profits and
whether the recent rally is sustainable.

Investors may focus on Kobe Steel Ltd (5406.T), Japan's
fourth-biggest steelmaker, which downgraded its earnings estimate
for the year ended March 31 to a net loss. [ID:nT200773]

"Japanese banking shares are likely to have poor results and
this, along with weakness in U.S. banking shares, will weigh on
financials," said Yoku Ihara, manager at the investment
information department of Retela Crea Securities.

"But the worst worry about the financial sector is over, so
shares are unlikely to fall that sharply."

Other market players said short-covering is expected to
emerge at any lows, keeping the Nikkei in a tight range.

The benchmark Nikkei .N225 is expected to move from 8,700
to 8,900. It closed at 8,832.85 on Tuesday, snapping a four-day
rising streak.

Nikkei futures traded in Chicago 2NKc1 closed at 8,800
compared with 8,860 in Osaka JNIc1.
----------------------MARKET SNAPSHOT @ 2241 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 815.55 -2.39% -19.930
USD/JPY JPY= 100.66 0.18% 0.180
10-YR US TSY YLD US10YT=RR 2.9002 -- 0.000
SPOT GOLD XAU= 882.85 0.32% 2.800
US CRUDE CLc1 48.25 -1.83% -0.900
DOW JONES .DJI 7789.56 -2.34% -186.29
-------------------------------------------------------------
> Wall Street tumbles as earnings season kicks off [.N]
> US dollar up on higher risk aversion before Q1 earnings [USD/]
> Bonds gain with safety buying as stocks fall [US/]
> Gold firms from 2-½ month low as earnings feared [GOL/]
> Oil falls nearly $2; eyes equities, inventories [O/R]
STOCKS TO WATCH

-- Yahoo Japan Corp (4689.T)

Yahoo Japan said on Tuesday it will take under its wing Usen
Corp's 4842.OJ loss-making online video site to cut costs as it
competes with Google Inc's (GOOG.O) YouTube.

-- Daiwa Securities Group Inc (8601.T)

Daiwa, Japan's second-largest brokerage, said it would post a
group net loss for the year to March, dragged down by a drop in
value in its equity holdings. [ID:nT214480]

-- Kobe Steel Ltd (5406.T)

Kobe Steel, Japan's fourth-biggest steelmaker, downgraded its
earnings estimate on Tuesday for the year ended March 31 to a net
loss, citing an appraisal loss on inventories as well as
impairment charges on stockholdings and fixed assets.
[ID:nT200773]

-- Kawasaki Kisen Kaisha Ltd (9107.T)

Kawasaki Kisen, Japan's third-largest shipping firm, is
expected to miss its forecast for the just-ended financial year,
with its group pretax profit expected to be reported at 60
billion yen, down 52 percent on the year and against the current
forecast of 67 billion yen, the Nikkei business daily said on
Wednesday.
(Reporting by Elaine Lies; Editing by Chris Gallagher)