Japan stocks to edge down after Wall Street slide

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TOKYO, Oct 16 (Reuters) Japanese stocks are likely to slip on Tuesday after the Dow Jones Industrials and S&P 500 posted their worst day in five weeks on Monday, partly on renewed credit concerns, but trade is expected to be thin and falls limited.

Nomura Holdings, Japan's largest brokerage, said on Monday it would pull out of the U.S. residential mortgage-backed securities market and cut a quarter of its U.S. workforce, pushing it to a big quarterly loss and renewing concern in Japan about the impact of the subprime mortgage issue.

But with many investors likely to hold back from active trade ahead of a raft of Japanese company results due out next week, falls were expected to be limited.

''The subprime issue has re-emerged in the market, but since there are many people who believe the worst has already been overcome, this is more likely to inhibit active buying rather than lead to active selling,'' said Hiroichi Nishi, general manager at the equity division of Nikko Cordial Securities.

''Shares are likely to head downward at the opening, but both a lack of active trading factors in Japan and sparse investor presence will prevent any large falls. There is also some technical support.'' Monday comments by Citigroup's chief financial officer, who said U.S. consumer credit will likely weaken this quarter after mortgage delinquencies accelerated, led to the biggest drop in Citi shares in two months and broadly weighed on financial services stocks.

Record high oil prices at over a barrel also pressured shares, threatening to fan inflation and dampen consumer and business spending.

Nishi said that oil prices can't be entirely ignored as a factor in Tokyo, but that they are more likely to affect individual firms that rely on them, such as shipping, rather than have a blanket market impact.

The Nikkei was expected to trade in a range from 17,200 to 17,350, with activity seen relatively light. It finished Monday trade up 0.2 percent at 17,358.15, buoyed by chip-related shares.

Nikkei futures traded in Chicago finished at 17,320.00, down by 90.00 compared to Monday's Osaka futures close,in a sign that Tokyo shares may well slide.

The Dow Jones industrial average ended down 108.28 points, or 0.77 percent, at 13,394.80. The Standard&Poor's 500 Index was down 13.09 points, or 0.84 percent, at 1,548.71.

STOCKS TO WATCH -- Nomura Holdings Nomura, Japan's largest brokerage, said on Monday it would pull out of the U.S. residential mortgage-backed securities market and cut a quarter of its U.S. workforce, pushing it to a big quarterly loss.

-- Asahi Soft Drinks Co Ltd Asahi Soft Drinks said on Monday it has agreed with Calpis Co., a wholly owned unit of food and seasonings giant Ajinomoto Co, to merge their vending machine businesses to pursue economies of scale in a mature market.

-- Idemitsu Kosan Co Idemitsu Kosan is now expected to report a group operating profit of about 82 billion yen (0 million) for the business year to March, down 20 percent from the previous year and about 5 billion yen below its forecast, the Nikkei business daily said on Tuesday.

The company's petroleum products segment has found it difficult to pass on the higher cost of crude oil, while earnings at its petrochemicals business have been hurt by higher raw materials prices, the newspaper said.

-- Kobe Steel Ltd Kobe Steel on Monday raised its earnings forecasts for the first half and full year, citing higher steel prices, strong demand for construction machinery and cost cuts in its engineering business.

Kobe Steel raised its group net profit forecast for the year to March by 6 percent to 90 billion yen.

-- Suzuki Motor Corp Suzuki has decided to invest 188 billion yen by the end of 2011 on a third domestic car plant and related facilities being built in Shizuoka Prefecture, instead of the initially planned 110 billion yen, the Nikkei business daily said on Tuesday.


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