Nikkei may slip, eyes on BOJ tankan and yen

TOKYO, Oct 1 (Reuters) - Japan's Nikkei average is likely to
dip on Thursday after U.S. shares fell due to a surprise
contraction in an index of Midwest business activity.

Investors will also take cues from the Bank of Japan's tankan
business sentiment survey due at 8:50 a.m. (2350 GMT, Wednesday),
although the market reaction is expected to be mild unless the
data deviates greatly from economists' forecasts.

The tankan is expected to show that big manufacturers'
business mood improved to its least pessimistic since December.
[ID:nT326310]

One stock to watch may be Japan Airlines Corp (JAL) 9205.T
after Japan's prime minister and transport minister said on
Wednesday the government was ready to support it, aiming to
dispel worries over the viability of the loss-making carrier.
[ID:nT55267]
"The Nikkei will probably start lower and then be stuck in
range-trading," said Hiroichi Nishi, general manager at the
equity division of Nikko Cordial Securities.
The yen's recent strength and caution ahead of economic
indicators such as U.S. jobs data on Friday are likely to make
investors hesitant to buy Tokyo shares actively, Nishi said.

Nikkei futures traded in Chicago 2NKc1 ended Wednesday at
10,065.00, down 0.4 percent from the Osaka close JNIc1.

The benchmark Nikkei is likely to move between 9,950 and
10,150 on Thursday, Nishi said. It rose 0.3 percent to 10,133.23
.N225 on Wednesday.

The yen stood at 89.78 yen JPY= to the dollar on Thursday.
The yen hit an eight-month high against the dollar of 88.23 yen
on trading platform EBS on Monday.

Many Japanese exporters have set their exchange rate
assumptions for the dollar around 90-95 yen for the current
fiscal year to March.

The impact of a stronger yen on earnings of exporter
companies is a concern for market players as a stronger Japanese
currency eats into exporters' profits when they are repatriated.
----------------------MARKET SNAPSHOT @ 2251 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 1057.08 -0.33% -3.530
USD/JPY JPY= 89.78 0.11% 0.100
10-YR US TSY YLD US10YT=RR 3.3053 -- 0.000
SPOT GOLD XAU= 1008.25 0.15% 1.550
US CRUDE CLc1 70.38 -0.33% -0.230
DOW JONES .DJI 9712.28 -0.31% -29.92
-------------------------------------------------------------
> Wall St slips on Chicago PMI, but Q3 ends strong [.N]
> Dollar falls as recovery hopes dim safe-haven demand [USD/]
> Weak data brings shorter debt back into vogue [US/]
> Gold reclaims $1,000/oz on weak dollar, oil rally [GOL/]
> Oil jumps over 5 pct, eyes gasoline demand [O/R]
STOCKS TO WATCH

-- Mitsubishi UFJ Financial Group (8306.T)

Mitsubishi UFJ Financial Group said on Wednesday it will
write down 28 billion yen worth of goodwill for the year to March
2010, citing the share price falls of subsidiary companies.
[ID:TFA006457]

-- Kobe Steel (5406.T)

Kobe Steel said on Wednesday that it had raised its group
operating profit forecast for the business year to next March to
15 billion yen from its previous forecast of 5 billion yen. The
steelmaker now expects a group net loss of 35 billion yen for the
year to next March, less than its previous forecast for a 45
billion yen loss. [ID:nT3064T0GJ]

-- Seven & I Holdings (3382.T)

Seven & I Holdings is considering closing around 30
Ito-Yokado Co stores by February 2013 in a bid to quickly turn
around the supermarket operator's earnings, the Nikkei business
daily said on Thursday.
(Reporting by Masayuki Kitano; Editing by Hugh Lawson)