January 28, 2010 / 12:10 AM / 9 years ago

Nikkei seen under pressure from yen, earnings eyed

TOKYO (Reuters) - Japan’s Nikkei average is likely to fall on Friday, pressured by a slightly stronger yen, while investor caution ahead of a slew of earnings reports is seen keeping trading in check.

A shadow of a businessman is casted in front of an electronic board displaying share prices outside a brokerage in Tokyo January 25, 2010. REUTERS/Yuriko Nakao

Toyota Motor Corp will be in focus after the world’s top automaker’s problems intensified as it announced it would extend to Europe and China a recall of millions of vehicles due to faulty accelerator pedals and floor mats.

Toyota’s shares traded in the United States slid 2.6 percent in active trade on Thursday, a day after their recorded their highest volume since October 2008. Toyota fell a further 4 percent in Tokyo trading on Thursday, taking losses since last week to more than 15 percent.

Nintendo may also draw attention after the games maker showed greater than expected resilience in its battle for market share last quarter thanks in part to a 20 percent price cut on its Wii product that sliced into profits.

“The Nikkei will likely fall to the 10,300 level after U.S. stocks slipped and as the dollar/yen is moving below 90 yen,” said Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets.

“Earnings reports then will likely drive the direction of the market. Still, if buying by foreigners continue and buying related to end-month window dressing emerges, the market could recoup some ground before the close.”

Nikkei futures in Chicago closed at 10,320, down 1 percent from the Osaka close, pointing to a lower start.

The benchmark Nikkei is likely to move between 10,300 and 10,500 on Friday, market players said. It rose 1.6 percent the previous day to 10,414.29, ending a four-day losing streak.

U.S. stocks dropped on Thursday partly as poor outlooks from Motorola and Qualcomm dented optimism in the technology sector.

But Japan’s high-tech sector, particularly chip-related firms reported bullish earnings on Thursday, with chip maker Elpida Memory Inc reporting its first net profit in nine quarters on a surge in DRAM prices.

The reporting season continues, with companies set to report later in the day including Mizuho Financial Group, Daiichi Sankyo, Mitsubishi Corp, JFE Holdings Inc and Toshiba Corp.

Wall St slides on tech results, global worry > Dollar hits 6-1/2-month high vs euro on Greece woes > Safety bid boosts short-dated US debt > Gold drops on dollar rise, liquidation worry > Oil falls for third day on weak U.S. fuel demand

STOCKS TO WATCH

— GS Yuasa Corp

U.S. solar start-up Suniva Inc said on Thursday it would partner with the U.S. unit of Japanese battery company GS Yuasa Corp to develop solar-powered energy storage systems.

— Elpida Memory Inc, Advantest Corp

Elpida sprang back to a net profit of 21.1 billion yen in October-December, its first in 9 quarters, from a loss of 72.3 billion yen in the same period the previous year, thanks to a boost in demand for advanced DDR3-type chips and a rise in corporate demand.

Advantest, which supplies chip testers to chip makers such as Intel and Samsung, said it now expects a annual net loss of 13.5 billion yen, missing a market consensus for a loss of 7.2 billion yen by 16 analysts.

— Komatsu Ltd

Construction machinery maker Komatsu booked a 60 percent fall in third-quarter operating profit as sales remained far below levels seen before the global downturn, and kept its forecast for profit to halve this financial year.

— Promise

Struggling Japanese consumer lender Promise said tough times are likely to continue for at least two years as it and its rivals try to find ways to survive tougher lending rules.

Reporting by Aiko Hayash; Editing by Joseph Radford

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