Nikkei set to fall on euro debt worries

TOKYO, May 23 (Reuters) - The Nikkei stock benchmark is set
to fall on Monday amid a flare-up in euro-zone debt worries
after ratings agency Fitch downgraded Greece and Norway
suspended a grant payment to the country.

Analysts said that trading may be thin as there are few
buying catalysts and as foreign buying may wane on renewed
concerns about the global economy, but resource stocks may
outperform on higher commodity prices.

"Small stocks may attract buying, while investors are likely
to stay away from global cyclical stocks like major exporters,"
said Hiroichi Nishi, general manager at SMBC Nikko Securities.

He added the Nikkei is likely to trade around 9,500.

The euro lost nearly 1 percent over disagreements on
how to handle debt problems in Greece and ahead of a Spanish
regional election. [ID:nLDE74F1GL]

Masayuki Kubota, a senior fund manager at Daiwa SB
Investments, also said in a note to clients that undervalued
small-cap stocks may outperform, highlighting small stocks with
good earnings and price-to-book ratio lower than 0.5.

Solar-power equipment makers may also be in focus on a
Nikkei report that the Japanese government may this week
announce a plan to make solar panels compulsory on the roofs of
all new buildings by 2030.

Stocks as Sharp Corp , Ulvac , Ishii Hyoki
and NGK Insulators could benefit, analysts
said.

"Some of the solar stocks have not fallen since the March
earthquake on hopes that renewable energy will be promoted after
the country was hit the nuclear crisis," said Yumi Nishimura, a
senior market analyst at Daiwa Securities."

"These stocks may continue attract buying."

While the Nikkei has shed 8 percent since the March quake,
Ishii Hyoki has added 5 percent and NGK only has fallen 0.1
percent.

Nikkei futures in Chicago 2NKc1 closed at 9,530, down 90
points from the close in Osaka JNIc1 of 9,620.

The benchmark Nikkei average closed down 0.1 percent
at 9,607.08 on Friday while the broader Topix shed 0.5
percent to 827.77.

----------------------MARKET SNAPSHOT @ 2316 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 1333.27 -0.77% -10.330
USD/JPY 81.69 -0.09% -0.070
10-YR US TSY YLD 3.147 -- 0.000
SPOT GOLD 1514.36 0.46% 6.970
US CRUDE CLc1 99.59 -0.51% -0.510
DOW JONES 12512.04 -0.74% -93.28
-------------------------------------------------------------

> Wall St slips on euro zone, spillover effect feared
> Euro to stay under pressure as debt fears flare up
> Government debt prices rise, supply may weigh
> Gold jumps 1.5 pct on euro zone debt fears
> Volatile oil ends higher, eyeing Europe and euro

STOCKS TO WATCH

- Tokyo Electric Power Co

Tepco reported a $15 billion net loss on Friday to account
for the disaster at its Fukushima nuclear plant, marking the
biggest loss in Japan by a non-financial company and prompting
the firm to warn its future was uncertain. [ID:nL4E7GK18U]

- Mitsui & Co

BP struck a key victory in its battle to share
the cost of the Gulf of Mexico oil spill when partner Mitsui &
Co agreed on Friday to pay $1.1 billion toward the clean-up bill
and possibly billions more in fines.

Japanese trading house Mitsui's exploration unit
MOEX owned 10 percent of the Macondo well but had sought to
avoid paying its share of the costs, claiming BP was negligent
and MOEX should be exempted from this obligation.
[ID:nLDE74J06S]

- Astellas

European regulators have recommended approval for a new
antibiotic from Astellas and Theravance , the first new
antibacterial medicine to win a green light in Europe in two
years.

Vibativ, or telavancin, is recommended for the treatment of
adults with nosocomial pneumonia caused by methicillin resistant
Staphylococcus aureus (MRSA). [ID:nLDE74J15G]

(Reporting by Ayai Tomisawa; Editing by Edwina Gibbs)