Nikkei set to rise, but narrowly; eyes on yen

TOKYO, Nov 12 (Reuters) - Japan's Nikkei stock average is
likely to rise on Thursday after Wall Street gained on upbeat
data and Chinese factory output pointed to a strengthening global
economy, though the yen's strength may limit gains.

Investors may focus on convenience store FamilyMart Co
(8028.T) after a source said Japan's third-largest convenience
store operator is in talks to buy smaller rival am/pm Japan Co.
[ID:nBNG460546]

The Nikkei business daily had reported earlier that
FamilyMart and its top shareholder Itochu Corp (8001.T) would
likely buy am/pm from its parent Rex Holdings Co for 10 billion
yen ($110 million).

Japanese shipping firm Nippon Yusen (9101.T) will likely
raise about 150 billion yen in its first public share offering in
40 years, the Nikkei also reported. [ID:nT369500]

But trading activity is likely to be limited a day after the
benchmark Nikkei 225 closed flat, with investors reluctant to buy
amid a dearth of factors.

"Total trading volume is very low right now, and concern
about the yen's moves is keeping investors away," said Hiroichi
Nishi, general manager at the equity division of Nikko Cordial
Securities.

"A lot of blue-chip shares sold earlier this week may see
some short-covering, while otherwise basically the activity will
be limited to specific shares with specific factors."

The S&P 500 and the Dow both closed at 13-month highs on
Wednesday after upbeat data for a top homebuilder, while Chinese
factory output came in at a 19-month high, both pointing to a
strengthening global economy.

The dollar hit a 15-month low against major currencies on
Wednesday on the view that U.S. interest rates will remain low
well into next year. It was flat against the yen in early Asian
trade at 89.86 yen. JPY=

Gold hit record highs near $1,120 an ounce on Wednesday, and
this is likely to benefit companies with connections to gold,
such as trading houses. [GOL/]

The benchmark Nikkei .N225 is likely to move between 9,800
and 9,950, market players said. It closed flat at 9,871.68 on
Wednesday.

In a sign the Nikkei is likely to open higher, Nikkei futures
traded in Chicago 2NKc1 closed at 9,940, up 0.6 percent from
the Osaka close JNIc1.
----------------------MARKET SNAPSHOT @ 2256 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 1098.51 0.5% 5.500
USD/JPY JPY= 89.89 0.06% 0.050
10-YR US TSY YLD US10YT=RR 3.4781 -- 0.000
SPOT GOLD XAU= 1116.4 -0.09% -1.050
US CRUDE CLc1 79.28 0.00% 0.230
DOW JONES .DJI 10291.26 0.43% 44.29
-------------------------------------------------------------
> Market gains on homebuilder forecast, China data [.N]
> Dollar hits 15-month low; sterling falls sharply [USD/]
> Prices steady after 10Y note auction [US/]
> Gold rises towards $1,120/oz on strong sentiment [GOL/]
> Oil rises slightly; market eyes dollar, china [O/R]
STOCKS TO WATCH

-- Daiwa Securities Group Inc (8601.T)

Daiwa plans to invest 100 billion yen in its operations in
Asia outside Japan through next spring, the Nikkei business daily
said on Thursday. [ID:nBNG497565]

-- Fujifilm Holdings (4901.T)

The head of Fuji Xerox Co, a joint venture Japan's of
Fujifilm Holdings and Xerox Corp (XRX.N) said he aims to double
its China sales every two years, capitalising on recovering
office equipment demand there and its direct sales method.
[ID:nT339927]

-- Nippon Oil Corp 5001.T

Nippon Oil said on Wednesday that it was still in negotiation
to develop Iraq's huge Nassiriya oil field, despite comments by
Iraq's oil minister that it refused to travel to the oil ministry
to seal the deal. [ID:nT338894]

-- Japan Tobacco (2914.T)

Japan Tobacco will take advantage of the growing popularity
of its British cigarette brands by raising the price of a 20-pack
by 10-12 pence from Nov. 24. [ID:nLB249524]

-- Honda Motor Co (7267.T)

Honda is not betting on immediate recovery in traditional
markets and will focus on bright spots China and India, although
it will not build an ultra low-cost car to take on Tata Motor's
(TAMO.BO) Nano, chief executive Takanobu Ito said on Wednesday in
New Delhi. [ID:nDEL377380]
(Reporting by Elaine Lies; Editing by Chris Gallagher)