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Written by: Staff
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TOKYO, Mar 17 (Reuters) Japanese stocks are expected to edge down on Friday in subdued trade ahead of the fiscal year end, amid caution over the direction of Japanese interest rates and as a fall in the U.S. Nasdaq index hits technology shares.

Seiko Epson Corp. may be in focus after it said it expects a recurring profit of $341 million in the year starting in April, a 54 percent jump from its 2005/06 projection.

Katsuhiko Kodama, senior strategist at Toyo Securities, said whether bank shares stop falling may provide a yardstick to gauge the market's direction.

''Banks in theory are able to post higher earnings under the circumstances of higher interest rates. But investors are reluctant to buy the sector despite the recent fall. That suggests how weak the market sentiment is,'' he said.

Traders expect the Nikkei share average to move between 15,950 and 16,200 on Friday. On Thursday it lost 1.37 percent to 16,096.21.

In Chicago, Nikkei futures expiring in June closed at 16,090, unchanged from the Osaka finish.

The Bank of Japan last week scrapped its super-easy monetary policy, marking the possible start of a tightening cycle.

Although BOJ Governor Toshihiko Fukui said on Thursday the central bank would keep rates near zero for a while, there are growing expectations that the bank could raise rates sooner than previously thought.

Technology shares may also be vulnerable after a rise in the yen against the dollar, which could hit profits from exports.

However a $1 per barrel rise in oil prices may lift resource-related stocks.

The Tokyo stock exchange is still shortening overall afternoon trading by 30 minutes to avoid computer system problems. Trade will begin at 1 p.m. (0400 GMT) instead of the usual 12:30 p.m. and will finish at 3 p.m.

STOCKS TO WATCH -- Sumitomo Trust&Banking Co.

Japan's fifth-biggest bank will spend 40 billion yen ($342 million) to buy preferred shares in a small Tokyo lender which are currently held by the government, sources familiar with the matter said on Thursday.

-- SUMCO Corp.

The maker of silicon wafers posted a 89 percent jump in annual profit on Thursday, driven by robust demand for its 300-mm wafers, and forecast a rise in profit this year that is largely in line with analysts' expectations.

-- Hitachi Ltd. and Mitsubishi Electric Corp.

The incoming president of Renesas Technology Corp., an unlisted join venture between the two firms, said in an interview with Reuters on Thursday that it expects higher sales and profits in the financial year starting on April 1, driven by brisk demand for its microcontrollers and system chips.

-- Fuji Television Network Inc.

Japan's top TV firm cut its profit forecast in half on Thursday after agreeing to sell its stake in embattled Internet firm Livedoor Co. at a 34.5 billion yen loss.

-- Eisai Co.

Eisai said on Thursday 11 patients have died while taking the Alzheimer's disease drug Aricept, which it makes, during a clinical trial in the United States.

REUTERS SK RAI0633

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