Nikkei to edge up, break key psychological level

TOKYO, June 11 (Reuters) - Japan's Nikkei stock average is
likely to edge higher on Thursday, breaking above the
psychologically important 10,000 level, with Inpex (1605.T) and
other oil-linked shares seen up after oil hit a seven-month high.

Shares with links to China, such as Komatsu Ltd (6301.T) and
other construction machinery makers, are also likely to be
strong, riding a wave of expectations that Chinese indicators
later this week will show the recession easing still further.

But overall gains are likely to be limited ahead of economic
data such as U.S. May retail sales figures, due out later on
Thursday, with profit-taking expected at the highs and the 10,000
level difficult to hold on to.

"The Nikkei is likely to open above 10,000 and may gain some
more from there, with 10,200 possible in the short-term, as funds
flow into riskier assets like stocks," said Nagayuki Yamagishi,
strategist at Mitsubishi UFJ Securities.

"But anything much above 10,200 is going to be extremely
difficult without some very good news or clear signs of economic
recovery, such as improving company earnings."

The benchmark Nikkei .N225 ended just a breath below 10,000
on Wednesday, marking a fresh eight-month closing high. It has
risen 42 percent since hitting a March 10 bear-market low.

It is expected to move between 9,800 and 10,100 on Thursday
after closing at 9,991.49 on Wednesday, market analysts said.

Nikkei futures traded in Chicago 2NKc1 were flat from their
Osaka close JNIc1, at 10,000, up a mere 0.1 percent.

----------------------MARKET SNAPSHOT @ 2254 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 939.15 -0.35% -3.280
USD/JPY JPY= 98.11 -0.1% -0.100
10-YR US TSY YLD US10YT=RR 3.9475 -- 0.000
SPOT GOLD XAU= 954.95 0.14% 1.300
US CRUDE CLc1 71.4 0.10% 0.070
DOW JONES .DJI 8739.02 -0.27% -24.04
-------------------------------------------------------------
> Wall St falls as rate worries dent recovery hopes [.N]
> US dollar rises as fears over govt debt sales ease [USD/]
> Supply surge pushes 10-year yields up to 4.0 pct [US/]
> Gold ends flat as dollar rises; inflation in focus [GOL/]
> Oil hits 7-month peak as US stockpiles wither [O/R]
STOCKS TO WATCH

-- Yamada Denki Co Ltd (9831.T)

Yamada Denki, Japan's largest consumer electronics
retailer, hopes to expand overseas, although it has postponed the
opening of a store in China, its first-ever store abroad, by
about one year. [ID:nSP126611]

-- Nippon Telegraph and Telephone Corp (9432.T)

NTT's finance unit, NTT Finance Corp, is expected to post a
second straight full-year operating loss in fiscal 2009, the
Nikkei business daily said. [ID:nBNG470099]

-- Nippon Paper Group Inc (3893.T)

Nippon Paper, Japan's No. 2 paper maker, will likely see a 61
percent drop in operating profit for the April to June quarter,
the Nikkei business daily said. [ID:nBNG466618]

-- Inpex (1605.T), other oil-related shares

Shares of oil and gas field developer Inpex, and other oil
related shares, are likely to rise after oil prices surged to a
seven-month high near $72 a barrel on Wednesday after a U.S.
government report showed a slowdown in crude imports eating away
at inventories in the world's top energy user. [O/R]
(Reporting by Elaine Lies; Editing by Chris Gallagher)