Tokyo stocks seen extending gains on Wall St, yen

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TOKYO, Sep 27 (Reuters) An overnight rise on Wall Street and a softening yen will likely help Japanese stocks extend gains on Thursday, with exporters such as Advantest Corp climbing higher.

Another notable stock may be Hitachi Ltd Sources close to the matter said Japan's biggest electronics conglomerate is mulling options for its ailing hard disk drive business including bringing in a strategic investor to turn the business around.

''A softer yen will likely support high-tech exporters.

Machinery shares may also gain as they benefit from solid demand from China and other Asian countries,'' said Hiroichi Nishi, a general manager of equity marketing at Nikko Cordial Securities.

''One concern is that the market lacks energy as we head towards the end of the first half of this business year.'' On Wednesday, trade slowed with 1.7 billion shares changing hands on the Tokyo exchange's first section, compared with a daily average of 2.3 billion in August.

Nikkei futures traded in Chicago finished the previous session at 16,605, 105 points above the Osaka close, pointing to a higher opening.

Against the yen the dollar rose 0.7 percent to 115.55 in New York.

Market participants said Tokyo's benchmark Nikkei average will likely move between 16,400 and 16,600 on Thursday after finishing Wednesday up 0.2 percent at 16,435.74.

Nishi also said that high public support ratings for Japan's new prime minister, Yasuo Fukuda, will likely provide comfort to the market as it seems to suggest the new administration will be stable.

Fukuda won nearly 60 percent support in the first public opinion poll published since the seasoned moderate took office earlier this week, double his predecessor's ratings.

U.S. stocks rose on Wednesday as technology shares extended their gains, led by gains in such companies as International Business Machines Corp and Cisco Systems Inc The Nasdaq Composite Index rose 0.6 percent to close at 2,699.03.

STOCKS TO WATCH -- TDK Corp, Densei-Lambda KK Electronic parts maker TDK Corp said on Wednesday it will spend 5 million to buy all shares it does not own in affiliate Densei-Lambda KK to expand into power switches for cars and digital products.

TDK also said it would take over the hard disk drive business of rival Alps Electric Co for 36.15 billion yen, putting a figure to a deal that was announced earlier this year.

-- Sony Corp, Toyota Industries Corp Sony said on Wednesday it would buy Toyota Industries Corp's stake in their small liquid crystal display joint ventures, in its latest step to focus on its core operations.

The two firms said they will merge ST Liquid Crystal Display Corp., a 50-50 venture, and ST Mobile Display Corp., owned 80 percent by Sony and 20 percent by Toyota Industries, on Dec 1.

Separately, a game magazine publisher said on Wednesday that Sony sold about 250,000 units of the new version of the PlayStation Portable game player in Japan in the first four days since its launch.

Reuters KK VP0520

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