Japan stocks seen recovering but gains capped

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Tokyo, Nov 5: A slight pickup on Wall Street will likely help Japanese stocks rebound on Monday, particularly recent losers such as Canon Inc, but gains are seen limited due to worries about the credit market.

One notable stock may be NSK Ltd after the Nikkei buiness daily said on Monday the bearings maker will set up a joint venture in China next month to mass-produce low-priced automotive parts for local carmakers.

''The market will likely open a bit higher as US jobs data was strong,'' said Yutaka Miura, deputy manager of the equity information department at Shinko Securities.

''But investors will likely sideline themselves later on the limited Wall Street reaction, lingering subprimes problems and receding prospects for (U.S.) rate cuts.'' Nikkei futures traded in Chicago closed at 16,510.00 on Friday, up 20 points from the Osaka close, indicating a slightly higher opening.

Miura said news that Japan's opposition leader Ichiro Ozawa had offered to quit would provide another factor for investors to hold back from active trade on mounting political uncertainty.

Democratic Party leader Ozawa decided to resign on Sunday after his party rejected an offer from the Prime Minister Yasuo Fukuda to join a new coalition and end a policy deadlock.

Market participants said the Nikkei average is likely to trade between 16,400 and 16,650. The benchmark ended Friday down 2.1 percent at 16,517.48, the lowest close since Oct. 26, amid rekindled credit fears.

US stocks eked out a gain on Friday on a late rally in industrial, technology and energy shares after a strong reading of US employment. The Dow Jones industrial average ended 0.20 percent higher at 13,595.10.

Citigroup Inc, which has signed an agreement to acquire all of Nikko Cordial Corp, will list shares in Tokyo on Monday as the largest U.S. bank continues to boost its presence in the world's second-largest economy.

STOCKS TO WATCH

-- Japan Airlines Corp (JAL) T> JAL is expected to post a fivefold jump or more in half-year operating profit due to robust demand for its international flights and cost cuts, the Nikkei business daily said.

-- Aozora Bank Ltd T> Aozora has considered acquisitions, including the purchase of a consumer finance firm, but has so far not done so because costs are too high, the president of the mid-size lender said on Friday.

-- Mazda Motor Corp Mazda posted a 1.5 percent rise in quarterly operating profit as a weaker yen, cost cuts and sales growth offset a cutback in shipments to North America, and kept its full-year profit forecast unchanged.

Mazda also denied a report that it was considering building a factory in Eastern Europe to meet burgeoning demand in the region, especially Russia.

-- Fast Retailing Co Ltd T> Fast Retailing said on Friday its Uniqlo casual clothing chain's same-store sales rose 4.2 percent in October from a year earlier, the first such gain in six months, helped by a successful sales drive for cashmere sweaters, which command relatively pricier tags than other items.

-- Casio Computer Co Ltd T> Casio Computer said it plans to launch W-CDMA mobile phones in Japan during the six months from October 2008 to March 2009, reaching out for a wider range of potential customers.


Reuters
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