TOKYO (Reuters) - Japan’s Nikkei share average is expected to open higher on Monday after China’s central bank cut the amount of cash banks must hold in reserve in an effort to encourage growth.
The Nikkei .N225 was likely to trade between 9,350 and 9,550, strategists said, while Nikkei futures in Chicago closed at 9,480 on Friday, up 80 points or 0.9 percent from the Osaka close of 9,400.
“The Nikkei traded in the 9,500-10,000 range for a long time after the March earthquake so there will likely be some selling at this level. But we can also expect buying by investors who missed chance to buy in the latest rally,” said Kenichi Hirano, operating officer at Tachibana Securities.
“This is a typical liquidity-driven market. So if we are starting to see more solid U.S. figures, the market will perhaps initially welcome them but then probably people will start to expect unwinding of stimulus steps and stocks could go lower.”
Exporters are expected to benefit from a weakening in the yen, which hit a 6-1/2-month low against the dollar. The U.S. currency was trading around 79.90 yen.
Receding concerns about the chance of a near-term debt default by Greece also lifted sentiment. Euro zone finance ministers are expected to approve a second bailout package for Greece at a meeting later in the day.
The Nikkei rallied 1.6 to 9,384.17 on Friday, a fresh six-month closing high and not far from its one-year moving average of 9,426, while the broader Topix index .TOPX advanced 1.3 percent to 810.45.
The benchmark Nikkei is up 11 percent so far this year, supported by a run of strong economic data out of the United States, as well as the European Central Bank’s liquidity injection of nearly half a trillion euros and further easing steps by the Bank of Japan.
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Reporting by Dominic Lau and Hideyuki Sano; Editing by Michael Watson