Nikkei set to rise on Wall Street gains

TOKYO (Reuters) - Japan's Nikkei average is likely to rise on Friday, pushing toward its key moving average, after a fall in U.S. jobless claims and solid sales reports by large retailers lifted Wall Street for a third straight day.

Nikkei futures traded in Chicago closed at 9,635, up 1 percent from the Osaka close.

Market players said the Nikkei's next upward target stands around 9,700, or its 25-day moving average, which is a proxy for a one-month moving average that is closely watched in Japan. The next target lies around 10,251, the index's recent high hit on June 21.

Inpex Corp (1605.T) will be in focus after Japan's top oil and gas explorer said it would raise up to $6.7 billion via a global share offering to finance its giant Ichthys gas project in Australia, diluting the value of existing shares by more than 50 percent.

The share sale is the biggest equity financing deal among non-financial companies in Japan this year, according to research company Dealogic.

"The Nikkei could reach 9,700, which is around its 25-day moving average, on a wave of short-covering after investors sold rather boldly around 9,000, betting the index might break below that level," said Kenichi Hirano, operating officer at Tachibana Securities.

"Naturally, the focus will be whether the Nikkei can go above the 25-day moving average and keep climbing."

The benchmark Nikkei .N225 is likely to move between 9,500 and 9,700, market players said. It jumped 2.8 percent the previous day to 9,535.74, boosted by short-covering from investors who believe the benchmark's slide to a seven-month low this week was overdone.

On Tuesday, the Nikkei slid as low as 9,091.70, just above the November 2009 low of 9,076 and the July 2009 low of 9,050. The Nikkei has tested 9,000 three times recently, making the level strong support, market players say.

On Thursday, U.S. stocks rose about 1 percent after teen apparel retailers like Abercrombie & Fitch (ANF.N) and department store chains like JC Penney Co (JCP.N) topped expectations in their June sales.

Added to the upbeat mood, initial claims for state unemployment benefits dropped 21,000 to a seasonally adjusted 454,000 in the week ended July 3, the lowest level since early May, the Labor Department said.

Eyes are shifting toward corporate earnings. U.S. earnings begin in earnest next week when Alcoa Inc (AA.N) reports on Monday, and Japan's reporting season gets into a full swing later this month.

Wall St up for 3rd day on data, retail sales .N > Risk appetite pushes euro to 2-month high vs dollar <USD/> > Bonds fall as stocks rise on stronger data <US/> > Gold ends lower as investor seek greater risk <GOL/> > Oil above $75 on US crude stock drop, jobless data <O/R>

(Reporting by Aiko Hayashi; Editing by Chris Gallagher)