Nikkei set to rise on strong domestic focus

TOKYO Wed Jun 27, 2012 7:25pm EDT

An employee of the Tokyo Stock Exchange (TSE) reacts as he works at the bourse in Tokyo August 9, 2011. REUTERS/Kim Kyung-Hoon

An employee of the Tokyo Stock Exchange (TSE) reacts as he works at the bourse in Tokyo August 9, 2011.

Credit: Reuters/Kim Kyung-Hoon

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TOKYO (Reuters) - Japan's Nikkei share average is set to rise on Thursday, supported by gains for domestically driven stocks, although the upside could be limited as hopes dwindle for a credible fix to the euro zone's debt crisis at an EU summit.

Market players said the Nikkei was likely to trade between 8,700 and 8,850 on Thursday after Nikkei futures in Chicago closed at 8,785, up 0.5 percent from the close in Osaka of 8,740.

"We're likely to see gains off a strong performance in U.S. markets overnight, but the focus is going to be on stocks driven by domestic demand," said Toshiyuki Kanayama, senior market analyst at Monex. "There's probably strong resistance above 8,800, which it struck on June 25."

The Nikkei rose 0.8 percent to 8,730.49 on Wednesday, powered by gains for construction and real estate, two sectors expected to benefit from a spike in demand before a consumption tax hike is introduced in 2014.

Exporters were given the cold shoulder amid uncertainty before a two-day meeting between euro zone leaders starting later on Thursday. While hopes are fading that the meeting will produce significant policy decisions to tackle the euro zone crisis, investors are waiting on the outcome before making major changes in position.

The Nikkei is still short of its five-day moving average at 8,750.30, but is clear of its 14-day average at 8,659.12. The benchmark index is currently down 13.4 percent on the quarter, which ends on Friday.


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($1 = 79.7600 Japanese yen) ($1 = 0.8028 euros)

(Reporting by Sophie Knight; Editing by Richard Pullin)

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