(Refiles with stocks to watch)
TOKYO, Aug 8 (Reuters) - The Nikkei is set to edge lower on Monday as investors remain concerned about a fall in U.S. futures prices, which were hit by rating agency Standard & Poor's downgrade on the country's AAA credit last week.
S&P 500 futures SPc1 fell 32.8 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 slumped 287 points and Nasdaq 100 futures NDc1 lost 57 points.
S&P on Friday cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government's budget deficit and rising debt burden, a decision that put Washington's dysfunctional politics under the spotlight.
But analysts said that after the Nikkei fell 5.4 percent last week and with the dollar holding above 78 yen before Monday's market opening, drops may be limited for the Japanese market. Investors are also awaiting the outcome after the Group of Seven leading economies agreed to hold an emergency phone meeting of finance ministers and central bank governors.
"Investors are agitated by the downgrade. But since the stock market tends to price in past events and look forward, investors are eyeing the G7 conference outcome, therefore they may stay on the sidelines for the time being," said Hiroichi Nishi, general manager at SMBC Nikko Securities.
Foreign securities firms placed net sell orders of 17.6 million shares before the market opens on Monday.
Other analysts also say that the Tokyo market may downplay the impact of the S&P move, with some even predicting a corrective rise.
"A downgrade on the U.S.' credit rating was somewhat expected, so the market even bounce later in the day as it fell sharply last week," said Yumi Nishimura, a senior market analyst at Daiwa Securities.
Nikkei futures in Chicago ended at 9,325, up 45 points from their Osaka JNIc1 close of 9,280.
The benchmark Nikkei average fell 3.7 percent to 9,305.04 on Friday, while the broader Topix dropped 3.3 percent to 809.32.
Analysts said that the Nikkei is expected to trade between 9,000-9,350 on Monday. ----------------------MARKET SNAPSHOT @ 2313 GMT ------------
INSTRUMENT LAST PCT CHG NET CHG S&P 500 1199.38 -0.06% -0.690 USD/JPY 78.24 0.17% 0.130 10-YR US TSY YLD 2.5629 -- 0.000 SPOT GOLD 1684.99 1.37% 22.740 US CRUDE CLc1 84.34 -2.92% -2.540 DOW JONES 11444.61 0.54% 60.93 -------------------------------------------------------------
> Futures open down 2 pct after S&P downgrade > Euro jumps on U.S. dollar after ECB call > US 10-yr govt bond futures up; 30-yr falls > U.S. gold futures strike record after S&P downgrade > Oil falls $3 after U.S. credit rating downgrade
STOCKS TO WATCH
Olympus said Friday it posted a 2.15 billion yen group net loss in the April-June quarter against a profit of 1.50 billion yen a year earlier on a sales fall attributable to the March 11 earthquake-tsunami disaster.
Softbank Mobile Corp stayed on top of the rankings of cellphone carriers' net increases in service subscriptions in July for the 16th straight month due to brisk sales of Apple Inc.'s iPhone 4, Kyodo reported, citing data released by carriers Friday.
-- Nissan Motor Co
Nissan said on Sunday it aimed to boost its sales in Japan in a move that would also help reduce exports by as much as a third and reduce the impact of the yen's crippling strength.
Rio Tinto and Mitsubishi Corp have made an offer to buyout Coal & Allied, valuing the Australian coal miner at A$10.6 billion ($11.1 billion).
(Reporting by Ayai Tomisawa; editing by Abi Sekimitsu)