Japan stocks seen higher on Wall St rally, soft yen

TOKYO, Dec 25 (Reuters) - A rally on Wall Street and a soft
yen will likely boost Japanese stocks across the board on
Tuesday, particularly benefiting exporters such as Canon Inc
(7751.T: Quote, Profile, Research, Stock Buzz), while financial stocks may gain after news from Merrill
Lynch (MER.N: Quote, Profile, Research, Stock Buzz) lifted shares in their U.S. peers.

One stock in focus may be NTT DoCoMo Inc (9437.T: Quote, Profile, Research, Stock Buzz). The Nikkei
business daily said Japan's top mobile phone operator will form
an alliance with Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz) that will include
incorporating Google's search and e-mail into DoCoMo's i-mode
mobile Internet service.

"The market will likely extend gains on a rise in U.S. stocks
and the softer yen, but investors are unlikely to actively take
positions as there are only three more trading days left this
year," said Yutaka Miura, deputy manager of the equity
information department at Shinko Securities.

U.S. stocks rallied on Monday, led by financial companies,
after Merrill Lynch took steps to shore up its balance sheet with
plans to raise up to $6.2 billion and sell a lending unit.

Nikkei futures traded in Chicago 2NKc1 closed at 15,685 on
Monday, 365 points above the previous close in Osaka JNIc1,
pointing to a higher opening. The benchmark Nikkei average
.N225 closed Friday up 1.5 percent at 15,257.00.
----------------------MARKET SNAPSHOT @ 2250 GMT ------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 1496.45 0.81% 11.990
USD/JPY <JPY=> 114.29 -0% 0.000
10-YR US TSY YLD <US10YT=RR> 4.2144 -- 0.000
SPOT GOLD <XAU=> 811.8 0.05% 0.400
US CRUDE CLc1 94 0.74% 0.680
DOW JONES .DJI 13549.33 0.73% 98.68
-------------------------------------------------------------
>Santa visits Wall St as Merrill deal lifts banks [.N]
>Yen hits six-week low, euro rises as trade thins [USD/]
>Pre-Christmas stock rally sends bonds lower [US/]
>Platinum hits lifetime high, gold steadies [GOL/]
>Oil little changed above $93, trade muted by hols [O/R]
STOCKS TO WATCH

-- Mercian Corp (2536.T: Quote, Profile, Research, Stock Buzz)

The wine maker, 50.1 percent owned by Kirin Holdings Co Ltd
(2503.T: Quote, Profile, Research, Stock Buzz), said on Friday it has slashed its operating profit
forecast for 2007 by 47 percent to 1 billion yen ($8.75 million),
due to weaker sales than expected of wine and rising costs of raw
materials.

-- Tokyo Star Bank Ltd 8384.T,

Japanese private equity fund Advantage Partners said on
Friday it would launch a bid for Tokyo Star Bank, allowing
investment fund Lone Star [LS.UL] to cash out of its 68 percent
stake in the lender.

Advantage Partners said it would offer 360,000 yen for each
Tokyo Star share, a 2.3 percent premium to Tokyo Star's closing
price on Friday of 352,000 yen. [ID:nT204774]

-- Sanyo Electric Co (6764.T: Quote, Profile, Research, Stock Buzz)

Sanyo plans to acknowledge that it made incorrect dividend
payments worth 28 billion yen during 2002-2004, despite an
earnings shortfall, sources close to the matter told Reuters on
Sunday. [ID:nT201268]

The company is expected to make an announcement on the matter
on Tuesday.

-- Mitsubishi Chemical Holdings (4188.T: Quote, Profile, Research, Stock Buzz)

Core facilities at Japan's largest ethylene plant, operated
by a unit of Mitsubishi Chemical, are to be shut for at least
three to four months after a fire last week, a business daily
said on Monday. [ID:nT131046]

-- Japan Airlines Corp (9205.T: Quote, Profile, Research, Stock Buzz), All Nippon Airways (9202.T: Quote, Profile, Research, Stock Buzz)

Japan Airlines and All Nippon Airways said they are among
several airlines charged by the European Commission with price
fixing on freight services. [ID:nT149764]

-- Goodwill Group Inc (4723.T: Quote, Profile, Research, Stock Buzz)

Japan may order scandal-hit Goodwill Group, a provider of
temporary staffing services, to shut all branches for two months
after illegally sending staff to jobs, the company said on
Saturday. [ID:nT199499]

-- Showa Shell Sekiyu KK (5002.T: Quote, Profile, Research, Stock Buzz), Sumitomo Corp (8053.T: Quote, Profile, Research, Stock Buzz)

Oil refiner Showa Shell Sekiyu KK and trading company
Sumitomo Corp said on Friday they would merge liquefied petroleum
gas (LPG) businesses in April to remain competitive in the
declining market. [ID:nT30934]

-- Sumitomo Metal Industries Ltd (5405.T: Quote, Profile, Research, Stock Buzz)

Sumitomo Metal, a major pipe maker, said on Friday it would
raise the domestic price of its stainless seamless pipes by 20
percent from December contracts to a level equal to its export
price. [ID:nT151315]

-- Gakken Co (9470.T: Quote, Profile, Research, Stock Buzz), Shubunsha Co 2143.OJ

Educational publisher Gakken said on Friday it would it
launch a tender offer to take control of cram school operator
Shubunsha. Gakken said it would offer 8,860 yen per share,
compared with Shubunsha's close on Friday at 6,400 yen.

-- Itochu Corp (8001.T: Quote, Profile, Research, Stock Buzz)

Trading house Itochu will buy a fossil fuel power plant in
the U.S. state of Virginia for about 20-30 billion yen to make a
full-fledged entry into the overseas power generating business,
the Nikkei business daily reported on Tuesday.

Itochu will acquire the Commonwealth Chesapeake power station
from Tenaska Power Fund LP, an affiliate of U.S. independent
power producer Tenaska Inc, the newspaper said.
(Reporting by Aiko Hayashi, Editing by Michael Watson)