Japan stocks seen up on Wall St, but gains limited

TOKYO, Sept 5 (Reuters) - Japanese stocks are expected to rise on Wednesday after Wall Street rallied and a report on August manufacturing eased economic concerns, but gains were likely to be limited by caution ahead of more U.S. indicators due out later this week.

The Wall Street rise was buoyed by technology shares, which are likely to forge higher in Tokyo, and attention will be on firms such as Sony Corp (6758.T), which said on Tuesday it will list shares of its financial unit on the Tokyo Stock Exchange on Oct. 11, raising up to 361 billion yen ($3.1 billion) in Japan's largest initial public offering this year. [ID:nT322531]

"The market will rebound after the positive showing in the United States, but there still isn't a lot of energy and investors are likely to sell to lock in profits at the highs," said Hiromichi Nishi, general manager of the equities division at Nikko Cordial Securities.

"With a lot of U.S. indicators yet to come out this week, the market remains cautious, with many opting to wait and see."

A U.S. report showing only a narrow slowdown in August manufacturing activity helped the dollar strengthen against the yen to move at around 116.27 yen, and it was around 116.22 yen in early Asian trade.

An optimistic outlook for technology shares buoyed Wall Street, with high oil prices boosting the energy sector, and similar trends were seen likely in Tokyo, with shares in high tech, trading houses and shipping firms expected to be active.

The Nikkei was expected to trade between 16,450 and 16,600.

Nikkei futures traded in Chicago 2NKc1 finished at 16,550.00 on Tuesday, up from the 16,400 Osaka close, an indication that Tokyo shares are likely to rise.

Nikko Cordial's Nishi said that the market was likely to test the topside at around 16,550 and that if it managed to break through it was likely to forge higher, but it remained to be seen if there was enough energy to do so.

The benchmark Nikkei average .N225 slipped 0.63 percent, or 104.46 points, to 16,420.47 on Tuesday. The broader TOPIX index declined 0.54 percent, or 8.70 points, to 1,596.74.

The Dow Jones industrial average .DJI rose 91.12 points, or 0.68 percent, to end at 13,448.86. The Standard and Poor's 500 Index .SPX was up 15.43 points, or 1.05 percent. The Nasdaq Composite Index .IXIC was up 33.88 points, or 1.30 percent, at 2,630.24.

The Nasdaq has risen 5.2 percent in the last four sessions, its best four-day run since October 2003.

STOCKS TO WATCH

--Komatsu Ltd (6301.T)

Komatsu, the world's No. 2 maker of earth-moving equipment, will likely post net profit growth of about 20 percent again in the next business year if current favourable market conditions continue, its CEO said on Tuesday. [ID:nT311287]

-- Tokyo Broadcasting System (TBS) (9401.T), Rakuten (4755.Q)