TOKYO Japan's Nikkei average may regain 13,000 on Friday, after tumbling more than 6 percent in the previous session, as robust data eased concerns over whether the U.S. economy can withstand a pullback in stimulus by the Federal Reserve.
"The Nikkei will rebound today because the U.S. stocks rebounded after lower jobless claims and strong retail sales," said Takashi Hiroki, chief strategist at Monex Inc.
The Nikkei .N225 is likely to trade between 12,700 and 13,000, strategists said. On Thursday, it fell to 12,445.38, its lowest close since April 3, the day before the Bank of Japan unveiled sweeping stimulus to revive the economy. The broader Topix .TOPX index sagged 4.8 percent.
Investors, mainly hedge funds, have been cutting their long Japanese equities and short yen positions on concerns that the Fed will roll back its stimulus 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 benchmark has fallen nearly 22 percent since that multi-year high, slumping to a bear market and wiping about $700 billion off its market capitalization.
U.S. retail sales rose more than expected in May and first-time applications for unemployment benefits fell last week, in signs of economic resilience.
Nikkei futures in Chicago closed at 12,920 on Thursday, up 3.8 percent from the Osaka close of 12,450.
Hiroki added he expected the settlement of Nikkei futures and options contracts expiring in June would go smoothly, helping to ease volatility in the market.
The Nikkei is still up 20 percent so far this year.
> Wall St rallies on economic data, technical factors .N > Yen hits post-April high vs dlr on Japan equities drop <FRX/> > U.S. bonds cut gains after weak 30-year bond auction <US/> > Gold drops as U.S. data dims Fed hopes <GOL/> > Oil up on positive U.S. data; gasoline leads <O/R>
STOCKS TO WATCH
--KAWASAKI HEAVY INDUSTRIES LTD (7012.T)
Kawasaki Heavy Industries said on Thursday it had ended merger talks with shipbuilding rival Mitsui Engineering & Shipbuilding Co Ltd (7003.T) and demoted its president, Satoshi Hasegawa, who supported the discussions.
--TOYOTA INDUSTRIES CORP (6201.T)
Machinery maker Toyota Industries plans to invest about 300 billion yen ($3.18 billion) over the next three years as it looks to make itself more competitive, the Nikkei said.
(Reporting by Dominic Lau; Editing by Edwina Gibbs)