Nikkei set to edge up on yen; eyes on JAL

TOKYO, Jan 4 (Reuters) - Japan's Nikkei stock average is
likely to edge higher on Monday, the first trading day of 2010,
with exporters such as Canon Inc 7511.T supported by a weaker
yen after U.S. jobless claims data strengthened hopes for a
steady economic recovery.

The Tokyo Stock Exchange said on Jan. 2 it would go ahead
with the launch of its new trading system, called "Arrowhead", as
planned on Monday after running final checks. [ID:nTOE60100E]

Japan Airlines Corp 9205.T is set to be in focus after
media reported that the state-owned Development Bank of Japan
would double its credit line for the struggling airline to 200
billion yen ($2.2 billion).

In addition, the president of JAL said he is against a
bankruptcy proceeding under a state restructuring plan and has no
plans to completely withdraw the carrier from overseas flights,
the Asahi Shimbun reported. [ID:nTOE60200G]

"Though U.S. stocks dipped on the last trading day of the
year, the economic data was better than expected and suggests a
steady economic recovery, cheering the dollar in particular,"
said Masayoshi Yano, senior market analyst at Meiwa Securities.

"JAL in turn may recover a bit as investors will be reassured
by the government support."

U.S. stocks ended 2009 on Thursday with their best gains
since 2003, driven by optimism about the economy's recovery and a
brighter outlook for profits. [.N]

A Thursday report that Americans filed fewer jobless claims
in the latest week than at any time in 17 months added to
expectations, prompted by a recent string of strong economic
data, that the U.S. Federal Reserve could raise interest rates
sooner than expected, helping to boost the dollar. [USD/]

The dollar was trading at 93.06 in early Asian trade JPY=,
which market analysts said should keep the Nikkei well supported.

But they also said investors could be wary ahead of Monday's
debut of the Arrowhead trading system.

The new system will be able to process trades in 5
milliseconds, 600 times faster than the 2 to 3 seconds needed on
the current system, and roughly the same speed as the New York
and London stock exchanges. [ID:nTOE5BT06B]

"There is some caution ahead of today's launch of the new
system," said Yutaka Miura, senior technical analyst at Mizuho
Securities.

The benchmark Nikkei .N225 is likely to move between 10,500
and 10,700. It closed at 10,546.44 on Dec. 30, having booked a 19
percent gain for 2009 as compared to a 42 percent fall in 2008.

In a sign the Nikkei is likely to open higher, Nikkei futures
traded in Chicago 2NKc1 closed at 10,665 on Thursday, up 1.2
percent from the Osaka close JNIc1.
----------------------MARKET SNAPSHOT @ 2246 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 1115.1 -1% -11.320
USD/JPY JPY= 93.04 0.04% 0.040
10-YR US TSY YLD US10YT=RR 3.8368 -- 0.000
SPOT GOLD XAU= 1095.85 -0.05% -0.500
US CRUDE CLc1 79.36 0.00% 0.080
DOW JONES .DJI 10428.05 -1.14% -120.46
-------------------------------------------------------------
> Wall St closes out '09 with best gains since 2003 [.N]
> Dollar rises vs yen on U.S. optimism, year-end buying [USD/]
> Bond prices fall on weekly jobless claims data [US/]
> Gold ekes gains to end 2009 with 25 pct return [GOL/]
> Oil ends 2009 78 percent above year-ago level [O/R]

STOCKS TO WATCH

-- All Nippon Airways (9202.T)

ANA is considering taking over the international routes of
struggling rival Japan Airlines Corp 9205.T, the Yomiuri
Shimbun newspaper said on Friday. [ID:nTOE600008]

-- Shinsei Bank (8303.T), Aozora Bank (8304.T)

Shinsei and Aozora may have their planned merger delayed, due
to difficulty integrating systems and depending on the outcome of
an inspection by Japan's financial regulator, the Nikkei
newspaper said. [ID:nTOE60000C]

-- Marubeni Corp (8002.T)

A consortium led by trading house Marubeni has proposed the
lowest tariff to build a 2,000 megawatt power plant in Riyadh for
Saudi Electricity Co 5110.SE. [ID:nLDE602061]

The consortium also includes Kansai Electric (9503.T)
(Reporting by Elaine Lies; Editing by Edwina Gibbs)