Nikkei set to rise on weak yen, offsetting U.S. 'cliff' worries

Mon Dec 24, 2012 6:32pm EST

TOKYO, Dec 25 (Reuters) - Japan's Nikkei share average is
set to rise on Tuesday despite a fall in Wall Street as
exporters are likely to gain on the weak yen, while volume may
stay low due to a lack of participants during the Christmas
holiday.
    Market players said the Nikkei was likely to trade
between 10,000 to 10,200 on Tuesday, after ending down 1.0
percent to close at 9,940.06 on Friday.
    Monday was a national holiday in Japan.
    U.S. stocks eased overnight as worries about the U.S.
"fiscal cliff" dampened enthusiasm, which had dragged down
Japanese shares on Friday after a Republican proposal to avert a
U.S. fiscal crunch failed to get enough support.
    On Sunday, some U.S. lawmakers expressed concern the country
would go over the cliff, and fail to avoid $6 billion in
spending cuts and tax hikes starting January, with some
Republicans saying that was President Barack Obama's goal.
    With only a week left before the fiscal cliff Dec. 31, talks
are now stalled with Obama and House of Representatives Speaker
John Boehner out of Washington for the holidays. 
    But analysts said that the weak yen will likely offset such
negative sentiment as the dollar last traded at 84.88 yen
, having risen as high as 84.965 yen on Tuesday morning,
the best level since April 2011. A weak yen lifts exporters'
overseas earnings when repatriated.
    "Yes, there is a 'cliff' concern, but the Japanese market's
sentiment is steady on the back of the weak yen," said Yutaka
Miura, a senior technical analyst at Mizuho Securities. "That
said, the market may be swayed by futures trading as volume is
expected to stay low as foreign investors are away on holidays."
    Analysts also said that most buying may come in early trade,
with the Nikkei's immediate resistance seen around its futures
close in Chicago at 10,145, up from the close in Osaka
 of 9,960.
    Shinzo Abe, who is set to become prime minister on 
Wednesday, renewed pressure on the Bank of Japan (BOJ) to adopt
a higher inflation target. Abe said he would try to revise a law
guaranteeing the BOJ's independence if his demand for a binding 
2 percent inflation target - double its current goal - is not 
met. 
 
> Start of 'Santa Claus rally' dampened by 'cliff' worries 
> Dollar edges higher as U.S. fiscal talks eyed; yen drops 
> US prices flat, volume plummets before Christmas        
> Gold near flat pre-Christmas; fiscal cliff in focus    
> Oil dips as fears of 'fiscal cliff' intensify           
    STOCKS TO WATCH
    
    --Mitsubishi Chemical Holdings Corp 
    Mitsubishi Chemical will acquire Qualicaps Co Ltd from
U.S.-based Carlyle Group LP, a person familiar with the
matter said on Tuesday, rewarding the buyout firm's second
attempt to sell the drug capsule maker. 
    
    --Nomura Holdings Inc 
    Nomura has wound down its five-member Hong Kong-based
financial institutions group (FIG) banking team as part of a
wider reorganisation of its investment banking business, sources
familiar with the matter said on Monday. 
    
    --Mitsubishi Electric Corp 
    Mitsubishi Electric pledged to pay a total 77.3 billion yen
($916 million) to several Japanese government agencies for
overbilling for equipment and services over several decades and
slashed its annual profit forecast by a quarter.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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