Nikkei seen hitting 10-month high on data, earnings

TOKYO (Reuters) - Japan's Nikkei average is likely to hit its highest point in 10 months on Tuesday after data on the U.S. manufacturing sector underscored optimism that the economy was recovering and lifted Wall Street.

Investors will be also watching shares of Panasonic Corp (6752.T) after the company reported a smaller-than-expected quarterly loss and sharply lifted its half-year outlook as it cuts costs to cope with a firmer yen and weak TV sales.

Companies scheduled to announce results later in the day include Toyota Motor Corp (7203.T), Elpida Memory 6665.T and Mitsui & Co (8031.T).

"Japanese stocks will likely move higher after global stocks fetched fresh highs, though caution that the market has gone up too high will probably keep sharp gains in check," said Kenichi Hirano, operating officer at Tachibana Securities.

"Domestic earnings reports so far have shown a rapid recovery, though they are still in the red or show sharp profit declines. Still, this earnings situation is giving strength to the market."

Nikkei futures traded in Chicago rose 1.4 percent from their Osaka close on Monday, pointing to a higher start.

Market participants expect the benchmark Nikkei .N225 to move between 10,250 and 10,550 on Tuesday.

In choppy trade the previous day, the Nikkei ended flat at 10,352.47, after briefly rising as far as 10,380.57, its highest level since October 6.

U.S. stocks rose on Monday, pushing the S&P 500 index .SPX above 1,000 for the first time in nine months, after the Institute for Supply Management said its index of national factory activity rose to 48.9 in July, the highest since August 2008.

While the reading was below 50, the level separating contraction from expansion, it was higher than analysts had expected.

Factory data, Ford sales help stocks extend rally .N > Dollar drops to lowest since Sept on stocks, data Prices slide as safe-haven assets lose luster. Gold, silver rise on dollar slide, Wall St rally. Oil rises over 3 pct on US, China factory output.

STOCKS TO WATCH

-- Elpida Memory 6665.T

Elpida said on Tuesday that it was in talks with the insolvency administrator and creditors on taking over failed German chipmaker Qimonda's graphics DRAM operations.

-- Suzuki Motor Corp (7269.T)

Suzuki Motor posted an 80 percent drop in quarterly operating profit hit by a stronger yen and declining sales, and it kept its annual forecasts amid an uncertain outlook for global vehicle demand.

-- Astellas Pharma (4503.T)

Astellas Pharma, Japan's second-largest drugmaker, reported a 4.8 percent drop in April-June recurring profit on Monday due to a stronger yen, while sticking to its full-year outlook.

-- Fujikura Ltd (5803.T)

Fujikura, a maker of data communications products, on Monday revised its group operating profit for the six months to September to a profit of 3 billion yen from a loss of 2 billion.

The company cited a good business climate for the information industry and recovery in electronics that will improve sales more than expected, as well as cost-cutting.

--Teijin Ltd (3401.T)

Teijin said on Monday that the synthetic textile manufacturer would stop making polyester fibers at its Matsuyama production site in western Japan as part of its efforts to shift production to China and Thailand, cut costs and return to profit.

(Reporting by Aiko Hayashi; Editing by Chris Gallagher)