Nikkei set to fall after strong aftershock rocks Japan

TOKYO Thu Apr 7, 2011 7:46pm EDT

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TOKYO (Reuters) - The Nikkei average is expected to fall on Friday after a major earthquake rocked northeast Japan the night before, sending Wall Street and the Nikkei futures lower and reigniting fears about the crisis at Fukushima Daiichi nuclear power plant.

The quake was rated magnitude 7.4 by the Japan Meteorological Agency, which said it was an aftershock from the March 11 quake that devastated northeastern Japan and knocked out the Fukushima plant, operated by Tokyo Electric Power Co (TEPCO) (9501.T).

TEPCO said there was no further damage to the plant, where it is struggling to contain radiation leaks and prevent further meltdowns of nuclear reactors.

"The market will lose following the aftershock, but I think its impact will likely be limited looking long-term," said Kazuhiro Takahashi, general manager at Daiwa Securities.

With the settlement of options, known in Japan as the special quotation or SQ, on Friday morning, and with the weekend nearing, market players said Tokyo stocks will likely move in a tight band around 9,500 -- the level they bounced back to after a panic selloff following the March 11 quake.

Nikkei futures in Chicago also pointed to a weaker start in Tokyo. They were 65 points lower at 9,525, from the Osaka close of 9,590.

Tokyo shares are expected to move in a range of 9,400 to 9,600 on Friday after nudging up 0.1 percent points to 9,590.93 the day before on short-covering in the post-quake losers such as energy and domestic-demand stocks.

Apart from shares of TEPCO, which fell to an all-time low of 292 yen on Wednesday, the market will focus on retailers, who started the corporate earnings season on Thursday, the first since the quake.

Convenience store operators Seven & I Holdings (3382.T) and FamilyMart (8028.T) predicted profit gains on Thursday, showing that general merchandise shops may be well-placed to weather back-to-basics spending of consumers following the earthquake.

STOCKS TO WATCH

-- Mitsui & Co (8031.T)

Mitsui & Co, Japan's second-biggest trading house, could invest up to 200 million euros ($286 million) in Bosnia's energy sector and is also eyeing opportunities in aluminum and drugs, top officials said.

-- Nissan Motor Co (7201.T)

Nissan said it plans to suspend production at its Sunderland plant in Northeast England for three days this month because of a shortage of parts from Japan following last month's earthquake, the Nikkei business daily reported.

-- Toshiba Corp (6502.T)

Toshiba submitted a proposal to Tokyo Electric Power and the Ministry of Economy, Trade and Industry to dismantle the damaged Fukushima Daiichi nuclear power plant by 2020, the Nikkei business daily reported.

-- Nippon Steel Corp (5401.T)

Nippon Steel, the world's No.4 steelmaker, said it is in talks with Tatt Giap (TATG.KL) to boost its stake in their Malaysian joint venture.

-- Mizuho Securities 8606.T

Mizuho Securities shut down its money-losing prime brokerage business in Singapore due to worries it would keep eroding its capital, putting it at risk of losing its operating license, documents obtained by Reuters showed.

-- Fast Retailing Co (9983.T)

-- Hokuriku Electric Power Co (9505.T)

Northwest Japanese utility Hokuriku Electric Power said on Thursday it may impose rolling blackouts in the summer for the first time in six decades if the two reactors at its sole nuclear plant remain shut for an extended period.

(Reporting by Antoni Slodkowski; Editing by Michael Watson)

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