Japan stocks seen rising on rate cut, weaker yen

TOKYO, Nov 1 (Reuters) - Japanese stocks are seen forging upwards on Thursday after a U.S. rate cut and signs that credit strains may be easing, with exporters such as Canon Inc (7751.T: Quote, Profile, Research, Stock Buzz) expected to rise on a slightly weaker yen. Among the stocks likely to be watched is Tokyo Electric Power Co (9501.T: Quote, Profile, Research, Stock Buzz), which on Wednesday cut its earnings outlook for the second time this year to forecast a loss -- its first in 28 years -- after it had to close the world's biggest nuclear power plant following an earthquake. [ID:nT246508]

The U.S. Federal Reserve lowered its benchmark lending rate by 25 basis points to 4.50 percent, as expected, with investors warming to its view that the U.S. economy was still relatively strong.

A raft of positive news, including U.S. reports showing surprising strength in economic growth and employment, led Wall Street higher overnight, and this strength is expected to spill over into Tokyo trade to buoy the Nikkei. "With the U.S. rate cut safely in place, Wall Street rose, and this -- plus the weaker yen -- is likely to send Japanese stocks higher right from the start," said Yutaka Miura, senior technical analyst at Shinko Securities.

"The market will likely test the 16,800 level, but after that energy may fade a bit as people turn their eyes to Japanese earnings, and many may head for the sidelines to wait and see."

Bargain hunting and short-covering were expected to emerge, with exporters likely to be one of the main beneficiaries and then lead the market upwards.

The dollar was at around 115.30 yen in early Asian trade.

U.S. crude futures CLc1 soared to settle at a record $94.53 a barrel, and this strength -- along with a surge in gold prices -- was expected to boost energy firms and trading houses.

The Nikkei was expected to move between 16,600 to 16,900. It ended Wednesday trade up 0.52 percent at 16,737.63.

In an indicator of how Japanese stocks may trade, Nikkei futures traded in Chicago 2NKc1 ended at 16,855 compared with a 16,700 close in Osaka JNIc1.