Nikkei set to test 7-1/2 month high as weak yen boosts exporters

Tue Dec 11, 2012 6:34pm EST

TOKYO, Dec 12 (Reuters) - Japan's Nikkei share average is
set to rise on Wednesday, testing a 7-1/2 month high led by
gains in tech shares and other exporters on the weak yen while
Wall Street's strong performance  buoyed sentiment.    
    Market players said the Nikkei was likely to trade between
9,550 to 9,650 on Wednesday. If the index reaches the
9,600-line, it will be the first time since April 27.
    Nikkei futures in Chicago closed at 9,590, up from
the close in Osaka of 9,520.
    "Chip-related shares may outperform on the strong Soxx
index... we see favourable conditions for the Japanese market
today," said Hiroichi Nishi, general manager at SMBC Nikko
Securities, adding that the current market's level makes
Japanese shares attractive again.
    The Philadelphia Semiconductor Index, or Soxx, rose
1.9 percent overnight, which is favourable for sentiment in tech
shares.
     The Nikkei ended 0.1 percent lower at 9,525.32 on
Tuesday, taking the index out of overbought territory though new
buying could bring the market back to that level again. Its
14-day relative strength index still stood near 70, a level
deemed overbought that often signals a possible near-term pull
back.
    The benchmark has risen 9.9 percent over the past month 
while the yen has softened after Shinzo Abe, the leader of the 
main opposition party which is expected to win a Dec. 16 
election, called for aggressive policy action from the Bank of 
Japan, including embarking on "unlimited easing".
    However, volume may stay light as investors keep an eye on
the outcome of a two-day policy-setting meeting of the U.S.
Federal Reserve which started on Tuesday. The Fed is expected to
announce a new round of Treasury bond purchases when the meeting
ends on Wednesday to replace its "Operation Twist" stimulus,
which expires at the end of the year. 
    The broader Topix index eased 0.3 percent to 786.07
on Tuesday.
         
> Big tech boosts S&P 500 to best close since election     
> Euro gains on German data; focus shifts to Fed policy  
> Prices drop on U.S., Europe hopes; Fed eyed             
> Gold edges down on U.S. budget hopes before FOMC       
> Oil up on OPEC output decline, ahead of group's meeting 
    STOCKS TO WATCH
    
    --Panasonic Corp 
    Panasonic plans to sell subsidiary Sanyo Electric Co.'s
digital camera business to Advantage Partners LLP as early as
March, the Nikkei reported.
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