Nikkei likely to rise after U.S. earnings reassure

TOKYO, Aug 19 (Reuters) - Japan's Nikkei average is likely to
extend gains on Wednesday after better-than-expected results from
big U.S. retailers such as Home Depot offset an unexpected drop
in housing starts and lifted Wall Street.

Sanyo Electric Co 6764.T will likely be in focus after the
Nikkei business daily reported Toyota Motor Corp (7203.T) would
procure batteries for hybrid vehicles from Sanyo, as Toyota's
battery joint venture cannot keep up with demand. [ID:nBNG374190]

"The market will likely be firm and move to consolidate
around the current level after positive retail earnings out of
the United States and a rebound in oil prices," said Kazuhiro
Takahashi, general manager at Daiwa Securities SMBC.

"Also, the U.S. housing data didn't really spark worries
about the outlook for the economy because even though overall
housing starts were down, those for single-family homes
increased."

Nikkei futures traded in Chicago 2NKc1 edged up 0.2 percent
from the Osaka close JNIc1 to 10,320 on Tuesday, pointing to a
slightly higher start.

Market participants expect the benchmark Nikkei .N225 to
trade between 10,100 and 10,400 on Wednesday. It edged up 0.2
percent the previous day to 10,284.96.

The S&P 500 Index .SPX rose 1 percent on Tuesday, boosted
by better-than-expected results from retailers Home Depot Inc
(HD.N) and Target Corp (TGT.N), which were largely due to
cost-cutting and tight control over inventory.

U.S. government data showed construction starts for
single-family dwellings, the worst-hit part of the housing
market, rose 1.7 percent last month from June to an annual rate
of 490,000 units -- the highest since October.

But a 13.3 percent drop in new multifamily home projects
pushed overall housing starts down 1 percent to an annual rate of
581,000 units after two months of gains. [ID:nN18438657]
----------------------MARKET SNAPSHOT @ 2307 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 989.67 1.01% 9.940
USD/JPY JPY= 94.82 0.13% 0.120
10-YR US TSY YLD US10YT=RR 3.5166 -- 0.000
SPOT GOLD XAU= 937.7 0.04% 0.400
US CRUDE CLc1 70.27 1.56% 1.080
DOW JONES .DJI 9217.94 0.90% 82.60
-------------------------------------------------------------
> Wall Street rebounds; retails, tech in the lead [.N]
> Dollar, yen decline on stock advance, German data [USD/]
> Prices slip as higher stocks curb safety appeal [US/]
> Gold rebounds as dollar weakens, oil recovers [GOL/]
> Oil settles above $69 on Wall Street gains [O/R]
STOCKS TO WATCH

-- Sony Corp (6758.T)

Sony will launch a slimmer, cheaper version of its
PlayStation 3 game console next month, hoping to jumpstart sales
and win back market share from rivals Microsoft and Nintendo.
[ID:nLI152101]

-- Sumitomo Mitsui Financial Group (SMFG) (8316.T)

SMFG has sounded out Daiwa Securities Group (8601.T) about
taking majority control of their investment banking joint
venture, the Yomiuri newspaper said on Wednesday. [ID:nT189654]

-- Don Quijote Co Ltd (7532.T)

The discount store chain said it expects its operating profit
to rise 4.8 percent to 18 billion yen ($190 million) for the year
ending in June 2010, in line with an average forecast by seven
analysts polled by Thomson Reuters.

For the year just ended, the chain posted a 17.2 billion yen
operating profit, up 7.5 percent from the previous year, as its
stores attracted increasingly thrifty consumers.
($1=94.70 Yen)
(Reporting by Aiko Hayashi; Editing by Chris Gallagher)