Nikkei set to rise after Greece's austerity deal

A man walks past an electronic board showing the Nikkei stock and Dow Jones averages outside a brokerage in Tokyo November 28, 2011.

TOKYO (Reuters) - Japan's Nikkei share average is expected to open modestly higher on Friday after Greece's political leaders agreed a long-delayed deal on painful austerity measures needed on a second bailout though European Union partners reacted skeptically.

Greece's international financial backers have been exasperated by a string of broken promises and weeks of wrangling over the terms of a 130 billion euro ($172 billion) bailout, with time running out to avoid a messy default.

"The Nikkei will gain slightly today on the news that Greece was able to come to agreement on reforms but it hasn't been approved by the euro zone finance ministers yet," said Toshiyuki Kanayama, senior market analyst at Monex Inc.

"This kept a cap on the Dow overnight but given the news, the euro has strengthened against the yen and the yen is also weaker against the dollar, so this will help market rise modestly."

The dollar was trading at 77.65 yen after hitting a high of 77.7, while the euro was at 103.16 yen.

Trading was also likely to be volatile with an option expiry.

Nikkei futures in Chicago closed at 9,030 on Thursday, up 20 points or 0.2 percent from the Osaka close of 9,010, while strategists said the Nikkei .N225 was likely to trade between 8,950 and 9,050.

The Nikkei closed 0.2 percent lower at 9,002.24 on Thursday, while the broader Topix index .TOPX advanced 0.3 percent to 784.49.

Japan's corporate earnings results have been disappointing so far. Out of 138 Nikkei companies that have reported, two-third of them failed to meet market expectations, Thomson Reuters StarMine data showed. That compares to 34 percent for S&P 500 .SPX companies.

However, the weak earnings have not deterred the rally in Japanese equities, boosted by a brightening outlook for the United States and an injection of 489 billion euros of three-year loans by the European Central Bank. The Topix is up 5.7 percent this year.

The Nikkei is up 6.5 percent so far this year after shedding 17.3 percent in 2011. > Greek deal enough for modest gains on Wall Street .N > Euro hits 2-mth high vs dollar; Greece deal allays fear <FRX/>> Treasuries fall as Greek deal damps demand for safety <US/> > Gold down as technical selling offset Greek hopes <GOL/> > Brent rises 8th day on Greek bailout deal <O/R>

STOCKS TO WATCH

-- MS&AS INSURANCE GROUP HOLDINGS INC (8725.T)

MS&AD Insurance Group is expected to suffer a net loss of 150 billion yen ($1.94 billion) for the year to March on insurance payouts from last year's flooding in Thailand, the Nikkei reported.

--CANON INC (7751.T)

Canon is looking to increase its sales in India by slightly more than 200 percent to $1 billion by 2015, its Chairman and Chief Executive Officer Fujio Mitarai told the Nikkei on Thursday.

--TOKYO ELECTRIC POWER CO (9501.T)

Tokyo Electric Power Co, the owner of the crippled Fukushima Daiichi nuclear facility, said on Thursday it would start planned maintenance on its last active reactor in late March.

--MITSUBISHI CORP (8058.T)

Dutch electricity grid operator TenneT said on Thursday it has agreed to sell minority stakes in two German offshore cable projects to Mitsubishi Corp for 240 million euros ($319.30 million).

(Reporting by Dominic Lau and Mari Saito)