Nikkei set to fall as yen stays firm, languishes in bear market
TOKYO, June 17 (Reuters) - The Nikkei share average is expected to open lower on Monday as weak U.S. stocks and a stronger yen dampen already fragile sentiment, with the Japanese benchmark languishing in a bear market. The Nikkei is likely to trade between 12,450 and 12,700, strategists said, while Nikkei futures in Chicago closed at 12,515 on Friday, down 2 percent from the Osaka close of 12,770. "The yen has strengthened again, but there is an expectations that if stocks sell off too much, the Bank of Japan will buy ETFs (exchange-traded funds), and this will give the market some support," said Hiroichi Nishi, equity general manager at SMBC Nikko Securities. U.S. stocks fell on Friday on low volume to end their third negative week in four on lingering concern over whether the U.S. Federal Reserve will soon start to trim its stimulus programme. The yen hovered near a two-month high against the dollar. It was last traded at 94.27 yen to the dollar on Monday. "The mountain of the SQ (Nikkei June futures and options contracts settlement on Friday) is behind us, but the next hurdle is this week's FOMC decision," Nishi said. The Fed will meet on Tuesday and Wednesday, and the U.S. central bank's policy statement and the news conference by Chairman Ben Bernanke after the meeting will be scrutinised for clues on when the Fed might start to scale back its stimulus. Investors, mainly hedge funds, have been cutting their long Japanese equities and short yen positions on the Fed's stimulus concerns and after the Nikkei had rallied more than 80 percent from mid-November to its 5-1/2 year peak hit on May 23. The extreme volatility and big falls in the past few weeks have been accompanied by disappointment over the government's recently unveiled growth strategy, which has led some investors to trim back their high expectations for Prime Minister Shinzo Abe's growth-spurring policies. On Friday, the Nikkei climbed 1.9 percent to 12,686.52, but was down 1.5 percent for the week, marking a fourth straight week of losses -- its longest such run since October. The broader Topix index advanced 1.2 percent to 1,056.45. The benchmark Nikkei has fallen 20 percent since hitting the multiyear peak on May 23, staying in bear market territory, but is still up 2.5 percent since April 4, when the Bank of Japan unveiled sweeping stimulus measures and has risen 22 percent this year. > Wall St slides in volatile week, eyes on the Fed > Yen strength sustained, market uncertain on Fed > U.S. bond prices gain on bets Fed to keep rates low > Gold posts weekly gain on physical demand, weak S&P > Oil up on Mid-East unrest, US crude touches 9-mth high STOCKS TO WATCH --FAST RETAILING CO LTD Japan's Uniqlo, owned by Fast Retailing, said on Sunday it plans to open two stores in Bangladesh, becoming the first international clothing retailer to do so. --MITSUBISHI MOTORS CORP Mitsubishi Motors is considering boosting output capacity in Indonesia and possibly building a new plant there to capitalise on brisk demand in emerging Asian economies.
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