Nikkei may retest 14,000 level on upbeat U.S. data

Mon Jul 1, 2013 7:22pm EDT

TOKYO, July 2 (Reuters) - Japan's Nikkei share average is
expected to open higher on Tuesday and may test 14,000, a level
not seen since late May, as  U.S. manufacturing and construction
data added to signs of an improving economy.
    The Nikkei is likely to trade between 13,800 and
14,000, strategists said, after advancing 1.3 percent to
13,852.50 on Monday to hit a four-week high and mark a third
straight gain - its longest winning streak since May. The
broader Topix index gained 1.5 percent to 1,150.70. 
    Nikkei futures in Chicago closed at 13,915 on
Monday, up 0.3 percent from the Osaka close of 13,870.
    U.S. manufacturing expanded last month, rebounding from an
unexpected contraction in May, but hiring in the sector was the
weakest in nearly four years, which could make the Federal
Reserve think twice about how soon to scale back its stimulus.
    A separate report also showed construction spending neared a
four-year high in May. 
    The strong U.S. data lifted the dollar to a four-week high
of 99.870 yen on Monday. The Japanese currency was last
traded at 99.660 to the greenback on Tuesday. 
    "We will likely continue to test strong levels," said
Kenichi Hirano, operating officer at Tachibana Securities. "A
weaker yen has become the normal condition, and stock prices are
showing a tendency to gradually rise."
    "Sentiment has improved in the Tokyo stock market. Could
this be the beginning of the second round of gains from
Abenomics?"
    The benchmark Nikkei had fallen as much as 22 percent from a
5-1/2 year peak hit on May 23 on concerns over the Federal
Reserve paring its stimulus, a slowdown in China - Japan's
second-largest export market, and disappointment over Prime
Minister Shinzo Abe's growth strategy to revive the economy.
    But it has since rebounded from a two-month low reached on
June 13. The Nikkei is up 12 percent since the Bank of Japan
announced radical monetary stimulus on April 4 and has risen 33
percent this year.
                                 
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    STOCKS TO WATCH
    --SUMITOMO HEAVY INDUSTRIES LTD 
    Sumitomo Heavy President Shunsuke Betsukawa said the company
will decide the fate of its shrinking shipbuilding business this
fiscal year, adding the business is small and that it is not
considering a merger or integration with another company, the
Nikkei newspaper said.
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