Japan stocks seen rising on earnings, rate cut hope

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TOKYO, Oct 30 (Reuters) Japanese stocks are expected to rise on Tuesday for the second straight day, reassured by hopes of good earnings results from trading firms such as Itochu Corp and expectations of a U.S. rate cut.

Among companies likely to be closely watched is Takeda Pharmaceutical Co Ltd, which said on Monday that U.S. health authorities had recommended that it stop some clinical trials of its cholesterol-lowering TAK-475, a key drug candidate for the company.

Soaring commodity prices are expected to buoy trading firms and the energy sector after U.S. crude oil futures topped for the first time, with shipping and blue-chip shares also expected to be strong.

''The results that have been coming out up to now are pretty good in general, or at least in line with expectations, and that's reassuring the market,'' said Nagayuki Yamagishi, a strategist with Mitsubishi UFJ Securities.

Among a wave of earnings due out on Tuesday are trading firms Itochu and Sojitz Corp, steel firms such Nippon Steel Corp, and Matsushita Electric Industrial U.S. stocks gained on chances that the Federal Reserve will cut rates on Wednesday at the end of a two-day meeting. A cut of 0.25 percent in the federal funds rate is nearly factored in, and there is even speculation of a 0.50 percent cut, as took place in September.

But Yamagishi said a rate cut, if it takes place at all, will likely be on the small side.

''The move this time would be mainly symbolic, with the Fed wanting to show it's prepared to respond to any problems, rather than flooding the market with cash. This would also give them the leeway for another cut later on if it's needed.'' The Nikkei is expected to move between 16,600 and 16,800, starting off strong.

It gained 1.2 percent or 192.45 points to end at 16,698.08 on Monday, while the broader TOPIX index climbed 2.1 percent or 32.52 points to 1,606.49. In a sign of how the market may move, Nikkei futures traded in Chicago finished at 16,755.00 compared with the Osaka close of 16,740 The Dow Jones industrial average rose 63.56 points or 0.46 percent to end at 13,870.26. The Standard&Poor's 500 Index was up 5.70 points or 0.37 percent at 1,540.98. The Nasdaq Composite Index was up 13.25 points or 0.47 percent at 2,817.44.

STOCKS TO WATCH -- Takeda Pharmaceutical Co Ltd T> Takeda said on Monday that U.S. health authorities had recommended that it stop some clinical trials of its cholesterol-lowering TAK-475, a key drug candidate for the company.

-- Fuji Heavy Industries, Daihatsu Motor T> Fuji Heavy and Daihatsu Motor plan to form an alliance under which Fuji Heavy will make midsize cars for Daihatsu Motor and Daihatsu will supply minivehicles and subcompacts to Fuji Heavy, the Nikkei business daily said on Tuesday.

-- Toshiba Corp T> Electronics group Toshiba posted a jump in quarterly operating profit on Monday, thanks to solid flash memory chip prices and power plant sales, and raised its full-year outlook by 12 percent, bringing it closer to market estimates.

-- Nikko Cordial T> Nikko, the Japanese brokerage unit of Citigroup, said its quarterly profit rose 72 percent from a year earlier, as growth at its asset management division overshadowed a loss at its investment banking arm.

-- Advantest Corp and other chip equipment makers Orders for Japanese semiconductor-making equipment plunged in September, logging the seventh straight month of decline as computer memory makers reined in spending, an industry group said on Monday.

-- Sumitomo Trust and Banking Co Ltd T> Sumitomo Trust said on Monday it will likely fall short of its full-year forecast by a quarter and lowered its yearly dividend, in part because the subprime-related turmoil forced it to book a net loss on sales of overseas corporate loans.

Sumitomo Trust, Japan's fifth-largest bank, now expects a group net profit of 90 billion yen (4.7 million) for the year to March, down from its previous forecast of 120 billion yen. It lowered its full-year dividend forecast by 1 yen to 17 yen.

-- Konami Corp T> Videogame maker Konami Corp said after the market close on Monday that its operating profit likely totalled 13 billion yen in April-September, up 28.5 percent from a year earlier, on robust sales of its home-use game software titles.

-- Victor Co of Japan Ltd T> Victor of of Japan Ltd (JVC) on Monday forecast a net loss of 32.5 billion yen for the year to March 2008, compared with the previous estimate of a 17.2 billion yen loss, due to heavier-than-expected costs for its head count reduction.

-- Shinsei Bank Ltd T> Shinsei Bank said on Monday its exposure to the troubled subprime housing market was largely unchanged since August, when it said it had about 0 million in investments tied to U.S.

mortgages.

REUTERS BJR PM0531

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