Nikkei set to rise, but strong yen may limit gains

TOKYO, March 4 (Reuters) - Japan's Nikkei stock average is
likely to rise on Thursday, boosted by relief on hopes of help
for Greece and encouraging signs for the U.S. economy, though a
strong yen and profit-taking may limit gains.

At home, investors may focus on Elpida Memory 6665.T after
the chipmaker said it was in talks to buy the flash memory assets
of U.S. company Spansion SPSNQ.PK. [ID:nTKB006729]

The U.S. Institute for Supply Management's gauge of service
sector activity and the ADP report on private employment pointed
to a strengthening economy and stabilising labour market
[ID:nN03225657]

That view of steady improvement was reinforced by the Federal
Reserve, which said economic activity strengthened modestly
across most of the 12 Fed districts during February, according to
its Beige Book summary. [ID:nWEQ003823]

Tokyo analysts said that while this data was encouraging,
investors would remain skittish and look to take profits ahead of
Friday's key U.S. jobs data.

"The Nikkei has risen for the past 4 trading days and market
energy is increasing, but while the encouraging U.S. data will
keep the downside supported investors are likely to be quick to
lock in profits ahead of the Friday jobs figures," said Hiroichi
Nishi, general manager at the equity division of Nikko Cordial
Securities.

Greece's cabinet approved sweeping budget cuts, the country's
third savings package in as many months, as it tries to secure
European help to tackle its massive debt burden.

The European Union praised the plan and said the country
could count on European solidarity, but German Chancellor Angela
Merkel, whose backing for any European safety net for Greece will
be vital, stopped short of any commitment to financial support.
[ID:nLDE6220NA]

While relief that progress seemed to be closer would help
buoy Tokyo stocks, a stronger yen would cap gains, market players
said. The dollar edged 0.1 percent higher in early Asian trade
but still hovered around 88.50 yen JPY=.

U.S. stocks ended little changed on Wednesday as worries
about the latest draft proposals to regulate the financial
sector, including provisions to stop proprietary trading at
banks, pressured financials. [ID:nN03256684]

"This proposal is something that Japan has to keep an eye on,
but at this point its direct impact on stocks here will be
limited," Nikko's Nishi said.

The benchmark Nikkei .N225 is likely to trade between
10,100 and 10,400, market players said. It closed at 10,253.14 on
Wednesday.

In a sign that the market may open higher, Nikkei futures
traded in Chicago 2Nkc1 closed at 10,250, just slightly higher
than the Osaka close JNIc1.
----------------------MARKET SNAPSHOT @ 2310 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 1118.79 0.04% 0.480
USD/JPY JPY= 88.49 0.03% 0.030
10-YR US TSY YLD US10YT=RR 3.6211 -- 0.000
SPOT GOLD XAU= 1138.65 -0.06% -0.700
US CRUDE CLc1 80.92 0.06% 0.050
DOW JONES .DJI 10396.76 -0.09% -9.22
-------------------------------------------------------------
> Market finishes flat as Obama pushes regulation [.N]
> Greek austerity plans lift euro; dollar falls [USD/]
> Long-dated bonds slip on optimism over Greece [US/]
> Gold hits 6-½ week high on currency volatility [GOL/]
> Oil rises toward $81, shrugs off U.S. inventory rise [O/R]

STOCKS TO WATCH

-- Aeon Co Ltd (8267.T)

Aeon, Japan's second biggest retailer, is set to open 10-15
suburban shopping malls in China by the end of the 2015 business
year, investing more than 20 billion yen ($226 million) to do so,
the Nikkei business daily said.

-- Panasonic Corp (6752.T)

Panasonic's TV business will likely turn profitable in the
financial year from April after two straight years of losses,
thanks to cost-cutting and the launch of higher-margin 3D TVs,
its president said. [ID:nTOE62206M]

-- Nissan Motor Co (7201.T)

Nissan said it will recall 540,000 vehicles worldwide due to
potential defects in brake pedal pins and fuel-gauge components,
mostly in the United States.

Nissan said five models from 2008 to 2010 model years,
including the Titan truck and Armada SUV, would be recalled due
to the risk of the brake pedal pins partially disengaging,
causing a loss of normal braking ability. [ID:nTOE62208Q]

-- Mitsubishi Motors Corp (7211.T)

Mitsubishi and France's PSA Peugeot Citroen (PEUP.PA) said
they have decided against forming a capital alliance but would
continue talking towards expanded business ties. [ID:nTOE622063]
(Reporting by Elaine Lies; Editing by Joseph Radford)